The total number of new cars bought on finance shrank over the course of 2017, though this number was compensated for by a growing used car market, according to the Finance & Leasing Association (FLA).

The 990,029 new cars bought on finance represented a 7% drop compared to 2016. A 6% growth in the used car sector to 1,357,216 meant that overall 2.5m cars were bought on finance, overall – flat compared to 2016.

The finance penetration for new cars over 2017 was 88.2%, compared to 88.1% in 2016.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “New business volumes in the POS consumer car finance market reached 2.3 million in 2017 – a similar level to 2016. The market expects broadly stable new business volumes in 2018.

“Trends in the new car finance market in the first half of 2018 are likely to be affected by the pattern of demand over the same period last year, when car purchases were brought forward into the first quarter prior to vehicle excise duty changes introduced in April.”

The value of the finance over this period was £18,784m (+2%) in the new car sector and £15,436 (+12%) in the used car sector. This meant the overall market jumped 6% by value, to be worth over £34bn.

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Tim Smith, head of motor finance, Black Horse, said: “These figures for finance volumes reflect a new car market correcting to a more sustainable position after record highs in early 2017 and a used car market showing consistent growth.

“A tougher new car market often results in more low mileage, nearly new stock with attractive offers for consumers. This type of stock profile works well with PCP plans, offering customers access to newer, cleaner vehicles so it’s no surprise we continue to see an increase in demand for PCP for used cars. We expect this trend to continue and the used car market to remain robust this year.”

Spencer Halil, director of Alphera Financial Services, said he was bullish for 2018: “As more consumers look to take advantage of the plentiful supply of young used cars, we expect the popularity of used car finance to grow. Consumers increasingly want to subscribe to services and products, rather than buy them outright – we see this trend extending to the used car market, and for finance penetration to increase in 2018.”