FLA reports uptick in consumer confidence

Consumer confidence appears to be growing with the consumer car finance market enjoying a positive start to the second half of the year.

The Finance & Leasing Association (FLA) has revealed that consumer car finance new business volumes grew by one per cent in July compared with the same month in 2023. The corresponding value of new business increased by two per cent over the same period.

However, year-to-date, new business is two per cent lower by value and three per cent lower by volume compared with first seven months of 2023.

The consumer new car finance market reported new business by value in July five per cent higher than in the same month in 2023, although new business volumes fell by three per cent. Year-to-date, new business volumes are seven per cent lower than in the same period in 2023.

In the consumer used car finance market, the value of new business in July was down one per cent compared to the same month in 2023, while new business volumes rose by three per cent. In the first seven months of the year, new business volumes in this market are one per cent lower than in the same period in 2023.

Consumer confidence

Geraldine Kilkelly, director of research and chief economist at the FLA, said:

“The consumer car finance market made a positive start to the third quarter of 2024 with modest growth in both the value and volume of new business in July. Consumers’ optimism about the outlook for their personal finances and committing to big-ticket purchases has greatly improved in recent months off the back of better news on inflation and interest rates.

“We expect the value of new business overall in the consumer car finance market to be slightly lower in 2024 than in 2023, with growth of one per cent in the consumer new car finance market offset by a three per cent fall in the consumer used car finance market.”

Mark Attwell, director at AA Car Finance, added:

“The car finance market showed signs of recovery in July, indicating a stabilising economy. With inflation hovering around the government’s two per cent target and interest rates on repayments now lower, thanks to a crucial decision by the Bank of England, consumer confidence is growing. This boost in confidence is likely to rejuvenate the car finance sector, especially with signs that the cost of finance will continue to fall this year.”