Car finance market drops a fifth

The Finance & Leasing Association (FLA) has reported a fall in new business volumes of 20% in July 2021 compared with the same month in 2020.

In the first seven months of 2021, new business volumes were 20% higher than in the same period in 2020. The consumer new car finance market dropped 20% in in the month, while the consumer used car finance market reported a fall of 19%.

Geraldine Kilkelly, director of research and chief economist at the FLA, said: “Supply side shortages – both of vehicles and labour – have hit the automotive industry in recent months. With most consumer new car sales now financed by FLA members it is not surprising that the consumer new car finance market followed recent trends in private new car registrations which fell by a quarter in July. Moreover, July 2020 was a record month for the consumer used car finance market following the lifting of the first lockdown restrictions which was unlikely to be replicated this year.

“Our latest research suggests consumer car finance new business by value will grow by 17% in 2021 as a whole, slightly lower than previous expectations. The consumer car finance market is expected to growth by a further 14% in 2022 as supply constraints gradually ease and strong consumer demand continues.”