Consumers continue to seek out car finance as volumes increase 10%
There’s cause for celebration in the contract hire and leasing industry, as new figures released by the Finance & Leasing Association (FLA) have revealed steady growth in the number of people securing new cars on finance.
The new car finance market saw new business grow 10% by value in July, compared with the same month last year. In the first half of 2016 overall, new business was up 11% by volume.
It is likely that the Personal Contract Hire (PCH) market, which currently accounts for around 7% of the market, has also seen significant growth during this period.
Commenting on the findings, Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The performance of the POS consumer new and used car finance markets remains in line with our expectations for 2016 as a whole. The FLA’s Q3 2016 retail motor finance confidence survey suggests that new business levels will remain broadly stable over the next twelve months.”
The growth follows news from SMMT which showed that the new car market once again showed its resilience to challenging economic conditions, with registrations up 3.3% compared with August 2015
The percentage of private new car sales financed by FLA members through the POS reached 85.3% in the twelve months to July, up from 84.9% in the twelve months to June.
Cars bought on finance by consumers through dealerships
New business | Jul 2016 | % change | 3 months | % change | 12 months | % change |
New cars | ||||||
Value of advances (£m) | 1,171 | +1 | 4,089 | +8 | 17,529 | +16 |
Number of cars | 71,494 | +1 | 239,701 | +5 | 1,038,050 | +10 |
Used cars | ||||||
Value of advances (£m) | 1,110 | +2 | 3,438 | +10 | 12,984 | +13 |
Number of cars | 103,554 | +1 | 318,610 | +8 | 1,213,908 | +10 |
The POS consumer used car finance market also reported new business growth in July, of 2% by value and 1% by volume.
Cars bought on finance by businesses
New business | Jun 2016 | % change | 3 months | % change | 12 months | % change |
New cars | ||||||
Number of cars | 48,811 | +5 | 135,606 | -2 | 510,681 | 0 |
Used cars | ||||||
Number of cars | 4,134 | +39 | 13,122 | +43 | 41,246 | +6 |
While there is cause for celebration with the above facts and figures, many in the industry remain cautious of a potential Brexit fallout and it remains too early to know if the UK’s decision to leave the EU will have any ramifications.