New figures released by the Finance & Leasing Association (FLA) show that consumer car finance new business volumes fell in June 2024 by 11% compared with the same month in 2023. The corresponding value of new business decreased by 10% over the same period. In the first half of 2024, new business was 3% lower by both value and volume compared with the same period in 2023.
The consumer new car finance market reported new business by value in June 6% lower than in the same month in 2023, while new business volumes fell by 12%. In the first half of 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 June of 13% compared with the same month in 2023, while new business volumes fell by 10%. In the first half of 2024, new business volumes in this market were 1% lower than in the same period in 2023.
Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said:
“In the first half of 2024, the consumer car finance market reported a modest fall in new business despite challenging economic conditions. The fall in the consumer new car finance market reflects trends in private new car sales and the shift by consumers to using salary sacrifice schemes to finance new battery electric vehicle purchases.
“Our latest research suggests that the value of new business in the consumer car finance market will fall by 1% in 2024 to £38.5 billion, reflecting growth of 1% in the consumer new car finance market to £17.1 billion and a 3% fall in the consumer used car finance market to £21.4 billion.”
Mark Attwell, Director at AA Car Finance, said “A decline in new car purchases by some private buyers, hit by the cost-of-living crisis, could have dampened finance-backed car deals in June.
“While inflation is easing, many consumers remain cautious about making significant purchases such as cars or homes. However, the Bank of England’s decision to lower the base rate could boost consumer confidence in the coming months and help to reinvigorate the car finance market.
“Although we continue to observe overall growth in the new car market, this is primarily being driven by strong fleet sales. In contrast, the latest SMMT figures reveal that sales to private consumers continue to fall.
“This trend suggests that individual drivers are postponing their car-buying plans as they await more favourable economic conditions and a reduction in the strain on their personal finances.
“As we move into the latter half of 2024, with inflation remaining steady and the potential for another interest rate cut later this year, we anticipate a resurgence in finance-backed car sales.
“Car finance options offer a viable solution for budget-conscious buyers, providing access to newer, more efficient, or electric vehicles that might otherwise be beyond their reach.”
