The new car finance market dipped along with car registrations in November as England was plunged into its second lockdown. As new car sales fell, so too did the amount of new business conducted by lenders, who helped UK customers finance 27 percent fewer new cars than during the same month in 2019.
Despite the lockdown, though, figures from the Finance and Leasing Association (FLA) showed lenders paid advances on loans for more than 46,000 new cars in November, with advances totalling just under £1.06 billion. Although sales fell by 27 percent, the value of those sales was only 24 percent lower than in the eleventh month of 2019.
That came as the Society of Motor Manufacturers and Traders (SMMT) data showed sales were down 27.4 percent in November, with just under 114,000 new cars registered. As expected, that figure is vaguely in line with the drop in new cars financed, as finance deals account for almost all new car sales. In the 12 months to November 2020, the FLA says 94 percent of all new cars were financed.
However, it wasn’t just the new car finance sector that suffered. The used market fell, too, with 86,100 used cars financed by private customers in November – down 23 percent on the same month in 2019. However, the value of advances for those cars only fell 18 percent, down to £1.14 billion.
As a result, the overall car finance sector saw new business volumes crumble by 24 percent in November, although the value of those deals only fell by 21 percent. In the 12 months to the end of November, new business volumes were down 19 percent, with the value of advances falling by 15 percent.
Geraldine Kilkelly, the head of research and chief economist at the FLA, said the figures showed the effects of the coronavirus lockdown on the car finance market. However, she also said the car finance industry would “support” people through the pandemic until the economy recovers.
“The fall in new business volumes in November reflects the closure of many showrooms as further restrictions were introduced to deal with rising cases of Covid-19,” she said. “UK-wide lockdowns during the first quarter of 2021 mean that the near-term outlook remains challenging. The motor finance industry will continue to support households and businesses during that time and as the economy recovers, as evidenced by the £30 billion of new finance provided to them by FLA members since the pandemic began.”