Downturn continues in motor finance markets

16 June 2009

The Finance and Leasing Association’s latest statistics show that the recent slowdown in new motor finance business has continued. Consumers purchased 32% fewer new cars with dealer finance through car showrooms in April 2009 compared with April 2008. In the first four months of 2009, the volume of sales was down by 28% compared to the same period in 2008.

But the statistics show that dealer finance is still the most popular way to buy a car. Over half (53.1%) of motorists used dealer finance to buy their new car in April. One of the most popular methods was Personal Contract Purchase (PCP), where, at the end of a fixed term of repayments, the customer has the option to purchase the car at a pre-agreed value, or to return it once all outstanding charges have been settled.

Table 1: Cars bought on finance by consumers through dealerships

	Apr 09	% change	3 months to Apr 09	% change	12 months to Apr 09	% change
New cars Value of advances £m Numberof cars	430 34,840	-25 -32	1,473 121,426	-22 -28	5,185 419,631	-15 -17
Used cars Value of advances £m Numberof cars	483 56,072	-21 -14	1,477 172,612	-16 -9	5,901 662,340	-10 -6

Commenting on April’s motor finance figures, Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said:

“The downturn in the motor finance market continues. There remains an urgent need for Government support in the wholesale finance markets in which motor finance companies raise the funds they need to lend to customers. Otherwise we risk a widening gap between supply and consumer demand.”

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