New research from a car insurance firm has revealed that many owners are downsizing their vehicles in order to save money during the credit crunch.
Nearly one in five car owners have either sold their vehicle or changed to a smaller model as a result of the economic downturn, according to a new study.
Liverpool Victoria (LV=) found that, of those who had made a change in the last 18 months, almost a third had done so to lower their car insurance premiums. Saving on fuel also scored highly, with six in ten citing this as a reason, while cutting road tax costs was mentioned by three in ten.
However, worries over the environment was only provided as an incentive by one in six.
The move appeared to be a success in monetary terms for most, with the average saving reported by respondents £309. But this has led to a sharp decrease in car sales, which has caused the government to consider the possibility of state aid for the beleaguered car industry.
"Buying a car is often the second biggest purchase people make after their house," said John O'Roarke, managing director of LV= car insurance. "So it's only natural that in the current economic downturn, when people are being more careful with their money, they also look to save on their motoring costs. This is undoubtedly a smart move, as the credit crunch looks set to bite deeper."
