Double digit decline in the consumer car finance market
Figures from the Finance & Leasing Association (FLA) have revealed a double digit decline in the consumer car finance market in June compared to the same month in 2023.
It found that new business volumes were down 11% while values fell by 10%.
Across the first six months of the year, both volumes and values were down three per cent on the first half of 2023.
When looking at new car finance, values were down six per cent in June with volumes 12% lower than June 2023. In the used car sector, values fell 13% and volumes 10%.
Geraldine Kilkelly, director of research and chief economist at the FLA, said: “In the first half of 2024, the consumer car finance market reported a modest fall in new business despite challenging economic conditions. The fall in the consumer new car finance market reflects trends in private new car sales and the shift by consumers to using salary sacrifice schemes to finance new battery electric vehicle purchases.
“Our latest research suggests that the value of new business in the consumer car finance market will fall by one per cent in 2024 to £38.5bn, reflecting growth of one per cent in the consumer new car finance market to £17.1bn and a three per cent fall in the consumer used car finance market to £21.4 billion.”
Decline in the consumer car finance market
The decline has been attributed to the cost-of-living crisis, which has meant many consumers are more reluctant to commit to long-term spending.
Mark Attwell, director at AA Car Finance, said:
“A decline in new car purchases by some private buyers, hit by the cost-of-living crisis, could have dampened finance-backed car deals in June. While inflation is easing, many consumers remain cautious about making significant purchases such as cars or homes. However, the Bank of England’s decision to lower the base rate could boost consumer confidence in the coming months and help to reinvigorate the car finance market.
“As we move into the latter half of 2024, with inflation remaining steady and the potential for another interest rate cut later this year, we anticipate a resurgence in finance-backed car sales.”
