Consumer car finance still 19.7% down from pre-pandemic levels, reveals FLA

According to new figures released by the Finance & Leasing Association (FLA), the number of new cars bought on finance by consumers through the point of sale grew by 10% to 234,065, compared to the same month in 2020.

However, it is worth noting that the figures are likely to be distorted due to the crushing effects of the lockdowns of March 2020. This means that a more accurate comparison would be to the same month in 2019.

Therefore, in March this year, consumer car finance new business decreased 20% from 291,538 vehicles in March 2019. This shows that the market is still very much struggling to reach pre-pandemic levels, however things are gradually improving.

Breaking these figures down into the new- and used-car markets:

• The consumer used car finance market reported new business volumes up by 24% in March compared with the same month in 2020. However, when compared with the same month in 2019 it has decreased by 5.6%.
• Similarly, the consumer new car finance market reported business volumes down by 2% in March compared with the same month in 2020. However, when compared with March 2019, it decreased by 31%.

Table 1: Consumer car finance market compared to previous years

Geraldine Kilkelly (pictured below), director of research and chief economist at the FLA, said: “In March, the consumer car finance market reported growth for the first time in six months, with used car finance new business volumes growing at their fastest rate for seven years. A year on since the introduction of the first restrictions to deal with the pandemic, the market and wider economy continue to be impacted by ongoing restrictions. However, the latest set of figures show that the industry has adapted to meet the challenges posed by the crisis.

“FLA’s most recent research suggests that motor finance providers are increasingly optimistic about the outlook for the rest of 2021. While mindful of the possibility of higher unemployment and a dip in confidence once the government support schemes come to an end, 91% of respondents to our latest industry outlook survey expect new business growth over the next twelve months.”

Table 2: Other periods compared to previous years

As displayed in the chart above, in the first quarter of 2021 the number of consumer cars financed hit 480,529, down 27.6% from Q1 2019. This equated to £8.26 billion of advances, down 19.8% from Q1 2019.

The new car market fared worse overall, suffering a 35.5% reduction in the number of cars finance, when compared with the same quarter in 2019.

However, when looking at cars bought on finance (see table below) by businesses across the UK, the new car market fared better. In March 2021, it decreased by 19.5% compared to the same month in 2019. The used car market dropped 38.8% compared to March 2019.

Table 3: Cars bought on finance by businesses