By Dan Monheit, originally shared on Carsales.com.au, 16.12.20
If you had to re-read that, you’re not alone. Given all the predictions that 2020 would be the worst year on record for new car sales, a 95% increase in enquiries seems a little strange. In a time of economic uncertainty who could be thinking of splurging?
Turns out, everybody, and according to Behavioural Science, there’s a very good reason. Introducing the Licensing Effect, a cognitive bias that refers to our core desire to maintain balance between our indulgent and our virtuous selves. Psychologically, we work on an internalised bargaining system as our mind tries to constantly offset our positive acts against our negative ones to create equilibrium. Essentially, it’s the ‘because I did X, I deserve Y’ mentality.
“Because I went to the gym this morning, I deserve a burger for lunch.”
“Because I’ve been off the wines all week, I deserve a big night out this Saturday.”
“Because I spent the last month hunting down Christmas gifts for everyone else, I deserve to buy something extra special for myself on Boxing Day.”
Since March, our ledgers have been well and truly stacked in the virtuous camp; following ever-changing restrictions, social distancing and staying home more than ever before. So not surprisingly, we’re all looking for ways to treat ourselves to equalise. With many of the usual suspects, including international travel, cruises, large scale sporting events and concerts off the table, cars remain right up there at the top of the list of treats for many. What we’re seeing now is that for millions of Australians, cars — especially new ones — are shaping up to be the perfect treat after surviving the year we’ve just had.
Perhaps even more interestingly, we’re seeing that if people are going to treat themselves to a new car, they’re going to do it properly. Enquiries for SUVs are up 212% YOY and as of October, new cars priced between $40k — 70k have seen the greatest level of enquiry growth.
Once you become aware of the Licensing Effect, it’s hard not to see it everywhere; save money, buy new shoes; work hard, book a holiday; salad for lunch, brownie for afternoon tea. As we head into 2021, Aussies are carrying a tidal wave of pent-up demand for all the nice things in life. With the conservatism and drudgery of 2020 all but behind us, we can expect to see the ‘treat yourself’ mentality endure into the early parts of 2021, with new cars staying high on the ‘treat myself’ wish list.