New business volumes in the consumer car finance sector fell 27% year-on-year in February, according to the latest figures from the Finance and Leasing Association (FLA).

In the new car segment, new business volumes fell 34% year-on-year in February. The percentage of private new car sales financed by FLA members in the twelve months to February 2021 was 92.8%.

The consumer used car finance market reported new business volumes 25% lower in February than in the same month in 2020. In the 12 months to February, the value of advances in the used car market fell 18% year-on-year to £15.2bn.

The number of new cars bought on finance by businesses fell 24% year-on-year in February to 16,036 cars. In the 12 months to February, the same sector saw a 40% decline when compared to the previous year.

Geraldine Kilkelly, director of research and chief economist at the FLA, said: “The UK lockdown restrictions over the winter months contributed to a fall in consumer car finance new business volumes of just over a quarter.

“As car showrooms re-open and consumer confidence recovers, we expect a strong rebound in demand. The value of annual new business in the consumer car finance market is expected to reach its pre-pandemic level this year.”

Motor Finance recently spoke to Adrian Dally, head of motor finance at the FLA, about the growing presence of personal contract hire (PCH) in the market.

“From around 2015, it grew from a very low base to represent roughly 11% of the new car finance market and it has stayed there since,” said Dally. “2020 has obviously been a distorted year for the market, but PCH levels have been stable across the last three years, so the growth has levelled off.”

Explaining the driver behind this trend, Dally adds: “If you take a very long-term view, it is the cultural trend away from ownership towards usership. Consumers subscribe to all kinds of products, like their mobile phones or Netflix, and cars are no different.”