Figures released today by the Finance & Leasing Association (FLA) show that FLA members in the motor finance market provided £38bn of new business in 2020. The figure represents a 19% decline from the 2019 total.
In December, new business volumes fell 12% year-on-year. In 2020 as a whole, new business volumes in this market were 21% lower than in 2019, with a total of 1.9m cars purchased.
The consumer new car finance market reported a fall in new business volumes of 18% in December compared with the same month in 2019. In 2020, new business volumes in this market fell by 25% year-on-year.
The percentage of private new car sales financed by FLA members in the 12 months to December 2020 was 93.2%, up from 91.7% in 2019.
The consumer used car finance market reported a fall in new business volumes of 8% in December compared with the same month in 2019. In 2020, new business volumes in this market fell by 18% compared with 2019.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The lifting of the second national lockdown in England in December contributed to an easing in the rate of contraction in new business in both the consumer new and used car finance market. Despite the restrictions introduced throughout last year as a result of the pandemic, the consumer car finance market provided finance for over 1.9 million cars in 2020 as a whole.
“The vaccine rollout in the UK has improved the outlook for the UK economy in the second half of 2021. Almost two-thirds of motor finance respondents to the FLA’s Q1 2021 Industry Outlook Survey expected some growth in new business over the next year if economic conditions improve.”
Stephen Haddrill, director general at the FLA, added: “Our latest figures show the great support that FLA members gave to their customers and the economy in 2020, including to SMEs. Member companies will build on this during 2021, contributing to a full recovery of the UK economy.
“To ensure that FLA members achieve this they need a balanced approach to forbearance from the FCA this year with a focus on tailored support; independent finance companies need to be supported; and clarity and stability on policies for net zero are required, including recognition of support for technology risk.”