Car finance market suffers as supply issues bite

The consumer car finance market reported a fall in new business volumes of 21% in September 2021 compared with the same month in 2020.

According to new figures released by the Finance & Leasing Association, in the nine months to September 2021, new business volumes were nine per cent higher than in the same period in 2020.

The consumer new car finance market reported a fall in new business of 25% by value and 27% by volume in September compared with the same month in 2020. In the nine months to September 2021, new business volumes in this market were six per cent higher than in the same period in 2020.

The consumer used car finance market reported a fall in new business of four per cent by value and 15% by volume in September compared with the same month in 2020. In the nine months to September 2021, new business volumes in this market remained 11% higher than in the same period in 2020.

Geraldine Kilkelly, director of research and chief economist at the FLA, said: “Supply chain issues have been particularly acute in the car market which is reflected in the 17% fall in new business volumes reported by the consumer car finance market in quarter three of 2021.

“Motor finance providers expect constraints on new car supply to ease sooner than those in the used car market. The supply issues in the new car market have primarily been driven by the lack of semi-conductors, while the knock-on effects from new car shortages combined with high demand have hit used car supply.

“Despite the risks to the economic and market recovery from supply chain disruption, higher inflation and further waves of Covid-19, our latest research suggests that the industry has maintained its optimism about the opportunities for growth. FLA’s quarter four 2021 industry outlook survey shows that 88% of motor finance providers expected new business growth over the next twelve months.”