Consumer car finance new business volumes fell by 35% year-on-year in January 2021, according to data from the Finance and Leasing Association (FLA).
In the new car segment, new business volumes declined by 28% year-on-year in January, while the used segment reported a fall of 34% when compared to January 2020.
Across private new cars financed by FLA members in the year ending January 2021, sales remained steady at 93.2%.
Geraldine Kilkelly, director of research and chief economist at the FLA, said: The impact of the latest UK-wide lockdown restrictions has not been as severe as the first lockdown introduced last March with many dealerships able to offer click and collect or deliver services.
“The value of new business in the consumer car finance market is expected to fall by 16% in Q1 2021 as a whole.”
In the 3 months to January 2021, the decline in new business volumes was less significant at 25% for both new and used cars.
The declining volumes of car finance business is attributable to Covid-19 restrictions. Across all national lockdowns, both new and used car sales have fallen below expectations.
Reinforcing the importance of reopening showrooms, Kilkelly commented: “Our latest research suggests that once showrooms re-open there will be a strong recovery in the consumer car finance market, with the value of new business expected to grow by 17% in 2021, and a further 12% growth forecast for 2022.”
In response to restrictions, dealers have been accelerating their digital transformations through the introduction of virtual showrooms and Click and Collect tools.
Despite being branded a permanent and positive shift in the industry due to their convenience, Philip Nothard, insight and strategy director at Cox Automotive, believes that the less popular Click and Collect schemes will be “supplemented hugely by the more standard showroom and test-drive experience that customers are used to”.
Northard concluded: “The opening of car showrooms on 12 April is a real opportunity for dealers to boost sales volumes after a hugely challenging 12 months. April and May could see a surge in new car sales, coinciding with the recent release of the new ‘21’ number plate.”