Consumer car finance new business grew 1% in July

Consumer car finance new business volumes grew in July 2024 by 1% compared with the same month in 2023, according to the latest data from the Finance & Leasing Association (FLA).

The corresponding value of new business increased by 2% over the same period. In the seven months to July 2024, new business was 2% lower by value and 3% lower by volume compared with the same period in 2023.

The consumer new car finance market reported new business by value in July 5% higher than in the same month in 2023, while new business volumes fell by 3%.  In the seven months to July 2024, new business volumes in this market were 7% lower than in the same period in 2023.

The consumer used car finance market reported a fall in the value of new business in July of 1% compared with the same month in 2023, while new business volumes grew by 3%. In the seven months to July 2024, new business volumes in this market were 1% lower than in the same period in 2023.

“The consumer car finance market made a positive start to the third quarter of 2024 with modest growth in both the value and volume of new business in July.  Consumers’ optimism about the outlook for their personal finances and committing to big-ticket purchases has greatly improved in recent months off the back of better news on inflation and interest rates.

“We expect the value of new business overall in the consumer car finance market to be slightly lower in 2024 than in 2023, with growth of 1% in the consumer new car finance market offset by a 3% fall in the consumer used car finance market.”

Table 1: Cars bought on finance by consumers through the point of sale
New business	Jul 2024	% change on prev. year	3 months to Jul 2024	% change on prev. year	12 months to Jul 2024	% change on prev. year
New cars
Value of advances (£m)	1,388	5	4,326	0	16,948	1
Number of cars	48,673	-3	153,814	-8	616,222	-6
Used cars
Value of advances (£m)	1,878	-1	5,379	-7	21,523	-5
Number of cars	127,023	3	363,480	-3	1,451,833	-3
Total cars
Value of advances (£m)	3,266	2	9,705	-4	38,470	-3
Number of cars	175,696	1	517,294	-5	2,068,055	-4
Table 2: Cars bought on finance by businesses
New business	Jul 2024	% change on prev. year	3 months to Jul 2024	% change on prev. year	12 months to Jul 2024	% change on prev. year
New cars
Number of cars	27,388	-8	85,819	-11	371,257	12
Used cars
Number of cars	8,019	27	17,700	2	62,480	-2

“With inflation hovering around the government’s 2% target and interest rates on repayments now lower, thanks to a crucial decision by the Bank of England, consumer confidence is growing.

“This boost in confidence is likely to rejuvenate the car finance sector, especially with signs that the cost of finance will continue to fall this year.

“Some experts anticipate an additional base rate cut from the Bank of England later this year, which would provide even more flexibility for consumers to pursue their preferred vehicles. Lower rates mean that budgets can stretch further, making it easier for drivers to afford their ideal cars while keeping monthly repayments lower.

“Recent data from the SMMT shows a 7.2% increase in used car sales during the second quarter of 2024, marking the sixth consecutive quarter of growth. This trend suggests that more consumers are turning to used cars as a cost-effective alternative.

“Financing a used car offers lower monthly payments compared to a new car, making it a more affordable option for many buyers. Used cars also depreciate more slowly, retaining their value better and reducing the total cost of ownership. 

“With flexible finance options, it’s easier for consumers to find a vehicle that fits their needs and budget, whether they’re first-time buyers or looking to upgrade.”