Used car finance grows amid falling new car market demand

Falling UK new vehicle sales are hitting the point of sale (POS) consumer new car finance market, which is experiencing declining business volumes.

New figures released today by the UK Finance & Leasing Association (FLA) show that the value of new business was flat in June compared to the same period in 2016, following an 8% fall in business volumes.

In the second quarter of 2017 overall, new business fell 7% by value and 16% by volume, denting rolling-year performance, which is up 4% by value, but down 2% by volume.

The percentage of private new car sales financed by FLA members through the POS was 86.3% in the 12 months to the end of June, unchanged compared with the same period to May.

Lenders in the used car market performed much better, with new business in the POS consumer used car finance market up 12% by value and 7% by volume in June, compared with the same month in 2016.

In the second quarter of 2017, this market reported new business up 9% by value and 4% by volume, while rolling year performance was up 10% and 6% respectively.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The recent trends in the consumer new car finance market very much reflect those in private new car sales.

“In the first half of 2017, the POS consumer car finance market reported a fall in new business volumes of only 1%, which remains in line with industry expectations of a broadly stable picture for the year as a whole.”