Consumer car finance registered growth for only the fourth time in 2022 as the sector delivered a 4% uplift by volumes and 9% by value.
Figures published by the Finance & Leasing Association (FLA) this morning (December 14) show that volumes rose to 179,297 as the value of that new business topped £3.3 billion across the UK’s new and used car markets.
In the ten months to October 2022, new business volumes are now 4% higher year-on-year and FLA director of research and chief economist Geraldine Kilkelly is hopeful of continued growth in 2023.
“In October, the consumer new car finance market reported monthly growth for only the fourth time so far this year, while further growth in the consumer used car finance market reflected the consistently robust performance by this market over the same period”, Kilkelly said.
“The point-of-sale consumer car finance market is expected to report new business volumes in excess of 2.2 million vehicles in 2022 as whole, 4% higher than in 2021, but 10% lower than in 2019 as supply shortages continue to weigh on the recovery of the new car market.
“The gradual easing of these shortages should support new business volumes over the next twelve months despite the pressure on real household incomes.”
Research recently conducted by The Car Expert showed that finance debt for new and used cars has risen to £40bn per year in the UK, prompting concerns that consumers may default on agreements amid soaring living costs.
And, in a recent editorial in the Financial Times, columnist Claer Barratt asked whether the automotive retail sector’s supply issues and buoyant used car residual values were a “happy accident” preventing the motor finance sector from “blowing up”.
Kilkelly urged car buyers to get in touch with their finance provider should they encounter difficulties due to strain caused by the cost-of-living crisis.
She said: “As always, customers who are worried about meeting payments should speak to their lender as soon as possible to find a solution.”
The FLA’s October consumer new car finance market reported growth in new business of 12% by value (to £1.43bn) and 2% by volume (to 54,702 units) in October.
Supply shortages continue to play their part in a 6% decline in new business volumes YTD.
The consumer used car finance market reported new business up 7% by value (to £1.87bn) and 5% by volume (to 124,595 units) in October compared with the same month in 2021.
YTD new business volumes in this market were 9% higher than in the same period in 2021, the FLA said.