Just 22% of smaller dealerships (those selling 200 or less cars per year) sell over half of their vehicles on finance, compared to 66% of their larger counterparts (those selling 500 cars or more), a survey by Close Brothers Motor Finance has found.

Speaking to 750 dealers between February and April, the lender found that in total half of dealers sold less than a quarter of their vehicles on finance, and one in four sold less than 10%.

James Broadhead, chief executive officer at Close Brothers Motor Finance, said: "For many of our smaller dealers, the bulk of their focus is being placed on securing a sale. They think week by week, not long term, and frankly, finance is at the back of their minds. This just isn’t sustainable. Smaller businesses need to adopt the mindset of a larger dealer by taking advantage of the numerous business benefits of financing.

"As well as consultation and advice, a finance partner allows smaller dealerships to reap generous financial rewards through commission, usually around 5% of the amount financed. Indeed, our top performing dealers sell 45-50% of their used cars through finance, and this can provide a substantial contribution to dealer profits."

Other findings in the survey the fact that despite only 20% of respondents selling over 500 or more cars in a typical year, this group accounted for 60% of sales on finance. Dealers selling 200 or less vehicles in a typical year accounted for just 6% of sales on finance.

Broadhead concluded: "We believe smaller dealerships are missing a trick here – by not realising the benefits that offering finance can have for their customers, but also for their businesses."

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