The consumer car finance market suffered in October as a global chip shortage reduced supply of new cars, according to figures revealed this week. Data from the Finance and Leasing Asscociation revealed an 11 percent drop in the number of vehicles financed in October compared with the same month in 2020.
In total, just over 166,000 cars were financed by private customers in October 2021, with more than 112,000 of those coming from the second-hand market. The number of new cars financed fell by 13 percent, dropping the figure below the 54,000 mark.
However, financed vehicles accounted for 93 percent of all consumer new car purchases, and the value of advances paid out by finance companies to fund those cars fell much less dramatically. At just under £1.28 billion, the value of advances on private new cars was down by eight percent compared with the same time last year.
In the used market, things looked slightly more buoyant, although there was still a 10-percent drop in the number of vehicles financed by private customers. However, the value of advances stood at around £1.69 billion – an increase of four percent compared with October 2020.
That meant while the overall consumer car finance market saw an 11-percent reduction in the number of vehicles financed, the value of advances on those cars dipped by just one percent compared with October 2020. In total, the advances were worth just under £3 billion.
Geraldine Kilkelly, the director of research and chief economist at the FLA, said the post-pandemic recovery of the finance market had been “hampered” by supply issues.
“The latest consumer car finance market data reflects the ongoing supply shortages of new and used cars,” she said. “The average advance to consumers for used car purchases reached £15,000 in October as high demand combined with supply pressures saw used car prices grow by almost 23 percent during the same period.
“The car finance market was quick to recover as the economy opened up, with the value of annual new business in the consumer used car finance market in October only one percent below the pre-pandemic peak. However, the pace of recovery has been hampered by supply shortages which are likely to persist into 2022 as countries across the world contend with new waves and variants of Covid-19.”