The consumer car finance market was worth a whopping £3 billion in April alone, despite the new car market’s ongoing struggles. That’s according to new figures from the Finance and Leasing Association (FLA), which says it expects the sector to experience “a strong recovery” in the second half of 2021.
Data released by the FLA this week shows more than 58,000 new cars were acquired on finance by private customers in April. That’s up a massive 2,195 percent compared with April 2020, when the coronavirus lockdown forced dealerships to close their doors. However, with dealers still forced to remain closed until April 12, it was down 23 percent compared with the 72,000 new cars financed in April 2019.
Nevertheless, lenders still loaned out almost £1.4 billion to help private customers secure new wheels in April. That figure represents a drop of just 14 percent compared with the April of 2019, while it’s a massive 2,370-percent increase on April 2020.
That comes after figures from the Society of Motor Manufacturers and Traders (SMMT) showed new car sales returning to roughly normal levels in April. Some 141,583 vehicles were registered in the UK that month, down around 12 percent on the numbers seen in April 2019.
But it’s no surprise that the finance market tracks the wider new car market so closely, given the FLA says its members provided finance for a massive 93 percent of all private new car sales in the 12 months to April 2021.
The used car sector also saw massive rises compared with the lockdown month of April 2020, with private customers financing almost 126,000 second-hand vehicles through FLA member lenders. That was an increase of more than 1,000 percent compared with the previous April, but it was down slightly on the 134,000 used cars financed in April 2019.
Despite that, the value of advances loaned to private customers in the used car sector actually rose relative to pre-pandemic levels. April 2021 saw finance companies loan customers £1.68 billion – an increase of 1,200 percent compared with April 2020 and three percent on April 2019.
As a whole, therefore, the finance companies loaned private car buyers a total of £3.06 billion in April 2021, with more than 184,000 cars acquired on finance. That means companies helped consumers secure around 12 percent fewer cars than in April 2019, but the total value of advances only fell by around five percent.
“The consumer car finance market received a boost in April as showrooms re-opened, with the significant growth rate also reflecting the all-time low level of new business recorded in April 2020 at the start of the first lockdown,” said Geraldine Kilkelly, the director of research and chief economist at the FLA.
“Pent-up demand and an improvement in consumer confidence are expected to contribute to a strong recovery during the second half of 2021, with our latest research suggesting that consumer car finance new business by value will grow by 19 percent in 2021 as a whole, and by a further 13 percent in 2022.”