According to a new report from Santander US, automotive demand is on the rise amongst middle-income Americans. Despite increasing costs, 47 percent are considering a vehicle purchase in the next year, an increase from 41 percent in 2023.
Santander’s Path to Prosperity Report surveyed 2,266 Americans who are bank or financial services customers in the “middle-income” range of ~$53,000 to $161,000. The report had some interesting findings linking automotive purchases to return to office, financial confidence and changing trends.
A Revival of Commuting
More Americans are returning to the workplace, and this shift is bringing cars back into the spotlight. 42 percent of workers have increased their number of commute days compared to last year, highlighting how essential personal vehicles remain for getting to work. For many, a personal vehicle is the only way to get to their job as 52 percent of middle-income Americans do not have easy access to public transportation. In fact, 74 percent currently use a vehicle to commute, and two-thirds cannot even work remotely. As return-to-work initiatives continue, the importance of a personal vehicle only increases, pushing the desire for a new car firmly into focus.
What’s striking is the sense of urgency among these prospective buyers. Two-thirds believe car prices will rise in the coming months, pushing them to act sooner rather than later. 53 percent are more likely to purchase in the next three months due to this concern. Urgency hasn’t led to rash decisions though, as 44 percent of auto owners have concerns about automotive reliability and are doing their due diligence before making a purchase. 67 percent have already begun to research different vehicle options, and 46 percent have visited a dealership.
Confidence Fuels Spending
The uptick in demand is closely tied to growing financial confidence. A remarkable 77 percent of middle-income Americans believe they’re on the right track toward financial prosperity, marking a record high. This confidence comes in tandem with a record low, just 18 percent, reporting feeling financially insecure.
With inflation concerns beginning to stabilize, more people feel secure in their jobs and are current on their bills, which in turn motivates big financial decisions, such as purchasing vehicles. However, these newfound optimists are still careful spenders, with many taking steps to adjust to rising prices by cutting back on extras like retail shopping and entertainment.
At the same time, inflation remains a key concern, not only adding pressure to vehicle prices, but also increasing costs for repairs and insurance. These challenges underline the growing complexity of financial decision-making for the average consumer.
Rethinking Homeownership and Financial Prosperity
The Santander report also highlights a fascinating shift in attitudes toward homeownership. With soaring home prices, fewer Americans see owning a home as essential for financial success. Instead, renting and multifamily housing are gaining popularity for their flexibility and affordability. 61 percent of renters say that renting is more affordable for them than paying a mortgage while 68 percent of those in multifamily homes believe it gives them extra financial flexibility.
Meanwhile, banks are stepping up to play a key role in financial prosperity. From personal loans to higher-interest savings accounts, many are leveraging financial products to manage debt, savings, and major purchases. 53 percent are considering a personal loan, potentially to help pay for a large purchase. Digital banking tools are also in high demand, with 86% of users banking online at least half the time.
The full report and more information about the Santander US survey is available here.
Related Stories
