PCP predicted for substantial growth

Near-prime personal contract purchase (PCP) could become a major growth point in the automotive industry in 2021.

Startline Motor Finance saw an increase of around 20% for its version of the product in the final months of last year and the trend has continued into January.

CEO Paul Burgess said: “One of the key developments we saw in 2020 was prime lenders tightening their underwriting rules in response to the pandemic and more potential car buyers being referred to near-prime lenders as a result.

“So far, this has largely affected hire purchase but is now starting to become apparent in the PCP sector. There has been a definite acceleration in our near-prime product in the last quarter and heading into 2021 as a result.

“This is something we are especially seeing at major dealer groups where PCP is a more prominent product. For them, it’s clear that near-prime PCP is becoming more important.”

Burgess added that the trend was also partly being powered by better online handling of motor finance by dealers and other introducers, as a result of lockdowns and a new focus on digital solutions.

“Our view is that, with the general trends that are likely to continue through 2021, it is something that is likely to make sense for an increasing number of introducers and car buyers. Certainly, we expect to see further growth over the next quarter.”