Q1 2025: Consumer Confidence Struggles into the New Year

According to the long-standing GFK Consumer Confidence Survey, consumer confidence was slowly improving overall at the end of 2024. However, that trend rapidly reversed in January, with all of GFK’s metrics dropping. Consumer views on the broader UK economy fell particularly steeply, both looking back a year (down 7 points) and at what was in store for the next 12 months (8 points lower). 

Following January’s decline, February provided a boost as all five measures of the Index improved, although they did not surpass the previous month’s drop. Most encouragingly, consumers’ outlook on their personal finances for the coming year improved by a healthy four points. 

The Society of Motor Manufacturers and Traders (SMMT) new car registrations data for January and February reflected these weak confidence levels. February marked the fifth consecutive monthly decline in activity year on year. Conversely, a rise in used car prices, particularly at the lower value end of the scale, according to Cap HPI, might suggest that the used car market is getting set for a strong period of demand and prices. 

The absence of consumers in the February new car market is not unusual. Typically, they will await the March new car plate opportunity. Similarly, consumer used car interest tends to peak in the month following the March and September new car peaks. So, consumer confidence in March is always of interest. 

Two measures in GfK’s March Index rose, while one was unchanged. Overall, consumer confidence remained subdued, with a headline score of -19. While this was better than the record lows seen during the height of the cost-of-living crisis, it is below the long-term average of -10. 

Of particular interest to the motor retail sector: 

• Personal Financial Situation – down to -9; four points better than March 2024. 
• Major Purchase Index - unchanged at -17; ten points better than in March 2024. 

Neil Bellamy, Consumer Insights Director, NIQ GfK, summarised the overall March situation by saying, “The current stability is to be welcomed, but it won’t take much to upset the fragile consumer mood.”  

From a car sales perspective, while confidence might be seen as fragile, people’s willingness to spend on a major purchase and their overall financial situation is better than this time last year, and that can only be encouraging.