Car Buyers Will Hit the Top of Their Budget

There’s no question that a car’s price, and very often its monthly payment, often determines the car people buy. But even as car prices seem higher than they’ve ever been, many buyers are happy to hit the top of their budget.

In a recent study*, CDK wanted to find out just how budget-conscious shoppers truly were. And while 93% of shoppers said they indeed had a set budget, 57% admitted the car they finally purchased was at the top end of their acceptable range.

Simply put: Car shoppers were willing to splurge on a vehicle that best met their needs and desires.

Why Spending More Can Make Sense to Buyers

While less than 10% of car shoppers surveyed said they actually exceeded their budget, it’s clear that the majority of in-market consumers aren’t afraid of their top-end figure.

Just why might a shopper be willing to spend more? We can draw a variety of conclusions here.

For one, automakers generally offer fewer configurations of most popular models than they might have in the past. If a shopper values a premium audio system, they may have to step up a trim level or two — and perhaps add an additional option package — to get it. By this point, they’re likely well past the base price, and they may be nearing the top of their budget.

A third reason may be the broader economy, which is still reasonably strong. Consumer confidence, according to McKinsey, is still relatively high in mid-2024. About a third of consumers say they’re optimistic in the economy, while just over a fifth of consumers indicated pessimism.

McKinsey did note in its most recent State of U.S. Consumer Sentiment report that consumers intend to spend less on a vehicle purchase over the next few months, which could suggest a shift toward less-expensive vehicles.

Generation Z and Young Millennial Buyers Are More Likely to Stick to a Budget

Our survey found that there’s a direct correlation between a shopper’s age and willingness to exceed a budget.

More than two-thirds of younger shoppers — those under 40 who identify as Gen Z or young millennials — said they had a fixed budget. Closer to half of shoppers over 40 said they were flexible with their budget. Older buyers may simply have more disposable income or savings to allocate toward a car purchase.

Flexible Shoppers Are Less Likely to Share Their Budget

Now, not every car shopper is willing to reveal their budget to the salesperson for a variety of reasons. It turns out that those with a pretty fixed budget were more likely to share. Nearly 85% of shoppers with a fixed budget, regardless of generation, said they provided the dealership’s salesperson with some details about how much they were comfortable spending on a car.

In contrast, those who had flexibility in terms of their budget were far less likely to share it with the salesperson. Nearly 40% of those with a flexible budget said they kept that fact to themselves.

If a customer is willing to open up about their budget, they may be less likely to consider a higher-end model. If they remain tight-lipped, they may be more amenable to a step-up model or trim level.

*Data collected from a shopping habits study of 1,048 new car buyers CDK conducted in the spring of 2024.

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