The consumer car finance market saw business boom in November last year, despite the supply issues that continue to plague the industry. Figures from the Finance and Leasing Association (FLA) show new business was up by around a third (33 percent) compared with the same month in 2020.
And the new car finance market played a key role in that, with the number of vehicles acquired on finance rising by 32 percent compared with the previous November. A total of 56,621 new cars were bought on finance by private customers in the 11th month of last year, despite figures from the Society of Motor Manufacturers and Traders (SMMT) showing sales were up by just 1.7 percent across the market.
More impressively, the value of the advances on those vehicles – essentially the amount lenders have stumped up to finance the cars – was up by 37 percent compared with the November before. In total, the value of the advances offered to private buyers was up to almost £1.38 billion in November alone.
But that growth had nothing on the used car sector, even though the number of vehicles financed only rose by a third. More than 113,000 used cars were financed by private customers in November – up 33 percent on the November before.
Yet the value of the advances on those cars was even more impressive. With supply issues in the new car market forcing the price of pre-owned vehicles up, the total value of advances was just shy of £1.75 billion. Aggregating the two markets – new and used – saw the new business increase 33 percent by volume, while the value of advances increased by 47 percent.
However, Geraldine Kilkelly, the director of research and the chief economist at the FLA said the results were largely down to last November’s poor performance, rather than strong sales in 2021. When 2021’s final results are announced in February, Kilkelly expects around 2.1 million vehicles to be financed – a drop of around 12 percent.
“The strong growth reported by the consumer car finance market in November reflects low new business volumes reported a year earlier as the UK entered another lockdown to deal with rising cases of Covid-19,” she said. “The market’s recovery continues to be disrupted by supply side shortages and the increasing squeeze on household disposable incomes from higher inflation and interest rates. New business volumes in the consumer car finance market are likely to be just over 2.1 million cars in 2021 as a whole, 12 percent lower than at the onset of the pandemic in February 2020.”