As the Autofestival draws to a close, what is the best way to switch your car in Luxembourg in 2023? Our colleagues from RTL 5 Minutes have spoken to different dealerships.
This Saturday 4 February, the 2023 edition of the Car Festival comes to an end. For car dealers, the festival is an opportunity to kick off their year with a bang by offering ten days of discounts. Still faced with a crisis, brands are hoping to bounce back after a difficult 2022.
In times of high inflation, what are the best options for switching cars? Should you buy or lease?
Buying, to be the owner of your car
At Bilia Emond, a BMW and Mini dealer, the sales staff are aware that most motorists rely on loans. "Whether it's at a bank or with us, our customers prefer to take out a loan rather than pay in cash," explains François Olivier, in charge of marketing for the brand. Even with the rise in interest rates? "It's still a bit early to say, but customers still have good reasons to take out a loan, even if the rates have risen. The notion of vehicle ownership remains important."
Pascal Driant, general manager of Car Avenue in Luxembourg, confirms that 60% of customers finance their purchase through the brand. With a traditional loan, for example, but mainly with "balloon loans", which consist of an initial payment followed by monthly instalments. "When compared to leasing, this option allows you to reduce the monthly payments", explains Anthony Kuntzinger, sales advisor at Renault Luxembourg.
At the end of the contract, the customer has the option of acquiring the vehicle in full in exchange for a final payment or returning the vehicle and moving on to another model with new financing. "Many customers appreciate being able to switch models after four or five years," Kuntzinger says. This is a common time frame for this type of financing.
But whether it is a traditional loan or a "balloon", it is always possible to add services, according to the Renault Luxembourg advisor, for example extended warranty or a maintenance contract.
Long-term rental: The new trend
Unlike buying a car, which requires you to pay several thousand euros upfront, long-term rental (also known as leasing or private lease) seems to be a more comfortable option.
It allows you to obtain a recent model with a reduced monthly payment, a fixed mileage, and a predetermined duration, including insurance, tyres, and maintenance. It is an all-in-one formula and can be adjusted "according to the customer's wishes", as Renault Luxembourg notes. When the contract expires, the driver can lease a new model with new technology and new monthly payments. Leasing seems to appeal more to customers who want to acquire an electric model. "The €8,000 government aid is deducted and reduces the monthly payments", Olivier François from Bilia Emond confirms.
Read also: Quick guide: Buying a new or used car in Luxembourg
In fact, this option can even allow cross-border workers to benefit from the Luxembourgish grant of €8,000 – a real plus for accessing a technology that is more expensive than a combustion engine.
Car Avenue, which has six dealerships in Luxembourg, has similar experiences: "Long-term rental has really taken off since 2022. Especially for electric cars, which are subsidised at €8,000." However, Renault points out that this does not mean that there are no leasing offers for combustion engine cars.
The main advantage of leasing is that it provides "low monthly payments that are fixed in advance and no need for the customer to worry about having to resell the vehicle at a price that could change."
As Pascal Driant puts it: "The customer says to themselves, 'I can drive in peace and then get a new, more modern vehicle.'" Motorists will just have to get used to not owning their car anymore. According to Driant, "it's been quite hard for customers not to own the vehicle, but the trend is changing. More and more motorists prefer to simply pay for the usage of their car."