Shaun Armstrong
With the economic uncertainty over the last few years one thing has stayed constant; consumers still love to use their cars.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
While the motor industry went through a tough time during the credit crunch, we are now experiencing a more settled market and consumers are once again happy to spend a large proportion of their income on buying, running and maintaining a vehicle. Existing lenders now also have good liquidity and most are looking to increase market share, but only based on solid underwriting principles.
At Creditplus, we are in an excellent position to assess the UK car finance market. We are a national provider of finance and therefore we have customers from all areas of the UK. While the number of finance applications we receive has increased year-on-year since 2010, the geographical split between these applications has remained relatively static.
As you would expect, the number of applications made each year in each region tends to follow the level of population in that area. Throughout the first half of 2012 so far, the South East, Greater London and East Midlands are the areas that have made the most car finance applications. Interestingly, there has been very little movement in the number of applications in these regions over the past three years.
While the industry might not have seen many changes in regional applications, the quality of the applications has varied, as have lenders’ criteria for finance acceptances. When comparing the first two quarters of 2011 with the same time frame in 2012, we have seen the number of prime candidates fall by 5.44%, while the number of non-prime candidates has risen by 9.54%.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThis shows that, although the number of consumers with excellent credit ratings has dropped, the number that now fall into the middle ground has risen. But, the increase in the near-prime numbers is not just consumers who used to have excellent credit ratings. Consumers who used to have subprime credit files, or files that would not have been good enough to obtain an acceptance, are also creeping up in quality and pushing into the near-prime boundaries.
The main statistic that backs this is the number of customers for whom we are unable to obtain car finance, which has dropped by 8.09%. The difference here is due to consumers becoming more sensible with the amount they borrow, their spending habits and the commitment to pay back debt. Another factor that has played a part is the level of liquidity coming into the market, and lenders becoming slightly more relaxed with their lending criteria.
With the car finance market growing, the motor industry is likely to continue its steady recovery. The more people that can obtain finance, the more cars the industry will sell. Dealers throughout the country should remain optimistic, as the number of finance applications and acceptances across the vast majority of areas in the UK are still growing.
Shaun Armstrong is owner and managing director of Creditplus
