The UK’s car finance sector is seeing more business in private retail, although it is still not back to pre-pandemic levels.
Moreover, in 2021 as a whole, new business volumes grew by 9% compared with 2020 to almost 2.1 million cars financed, although that was still 14% lower than in 2019.
The consumer new car finance market reported new business up 11% by value and 8% by volume in December compared with the same month in 2020. In 2021 overall, new business volumes in this market were 6% higher than in 2020, but remained 21% lower than in 2019. The percentage of private new car sales financed by FLA members in 2021 was 91.8%, in line with pre-pandemic levels.
The consumer used car finance market reported new business up 15% by value, but fell 2% by volume in December compared with the same month in 2020. In 2021 overall, new business volumes in this market were 10% higher than in 2020, but remained 9% lower than in 2019.
Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said:
“The consumer car finance market rebounded in 2021, but the pace of recovery was hampered by increased economic uncertainty as new waves and variants of Covid-19 emerged, and the global shortage of semiconductors hit vehicle supply.
“Economic and market conditions will remain challenging this year as many households face a significant squeeze on disposable incomes from higher inflation, interest rates and taxes. However, supply issues are expected to ease and business investment is expected to recover as the year progresses. The FLA’s Q1 2022 industry outlook survey shows that 92% of motor finance providers expect new business growth over the next twelve months.”