Retail car finance business in March fell 5% year-on-year to £4.8bn (€5.4bn), figures from the Finance and Leasing Association (FLA) have shown.

Total volumes fell 10% to 294,439 contracts.

New car finance decreased to £3.3bn, down 5%. Volumes decreased sharply, down 15% to 167,965 contracts.

Used car finance fared better, rising 4% to 1.4bn. Volumes fell slightly by 1%, to 126,474 contracts.

The three months to March saw an year-on-year decrease in volumes, but a rise in total value of contracts, up 3% to £9.9bn. For used cars alone, the increase was 13% to £4.5bn

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “Trends in the new car finance market in the first quarter of 2018 are likely to have been affected by the impact on demand for private new cars in Q1 2017 of changes to vehicle excise duty introduced in April that year.

“However, in the first quarter of 2018, point of sale consumer car finance new business volumes overall were only 1% lower than in the same period in 2017.”

In a report released this week, Close Brothers Motor Finance forecast consumer demand to shift away from new cars towards the used segment, due to economic uncertainty related to Brexit.