The latest figures from the Finance &
Leasing Association (FLA) show that, in October, there was “strong
demand from consumers for new car finance”.

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Compared with October 2008, the monthly results for
October 2009 showed a rise of 18 percent in new car point-of-sale
finance.

“Demand for new car finance was particularly weak
during the final months of 2008, and car buyers are this year
taking advantage of the reduced VAT rate as well as the attractive
finance options available in dealerships,” the FLA commented.

“The FLA expects new car finance to perform well in
the last two months of the year ahead of the return to a higher VAT
rate in January.”

However, used car PoS finance fell by 14 percent in
October compared with the same month last year – a decline perhaps
partially attributable to the impact of the scrappage scheme, which
tempted traditional used car buyers towards new cars instead.

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The FLA’s head of motor finance, Paul Harrison,
said: “While recent growth in new car finance is welcome, the
withdrawal of government incentives in 2010 – in particular, the 15
percent VAT rate – will affect demand. The end of the scrappage
scheme may also mean a return to more traditional buying
behaviour.

“Wholesale finance remains expensive and we shall
be closely monitoring how this impacts on the motor finance market
in 2010. We hope to see positive results from the government’s
efforts to improve the wholesale market.”

Table 1: Cars bought on finance by consumers
through dealerships

 

Oct 09

% change

3 months to Oct 09

% change

12 months to Oct9

% change

New cars

Value of advances (£m)

556

21

1,787

12

5,321

-17

Number of cars

43,946

18

139,218

9

426,221

-21

Used cars

Value of advances (£m)

457

-8

1,373

-14

5,449

-16

Number of cars

48,478

-14

144,941

-18

612,459

-13

Source: FLA
 

Oct 09

% change

3 months to Oct 09

% change

12 months to Oct9

% change

New cars

Number of cars

35,885

7

99,960

-1

359,807

-20

Used cars

Number of cars

4,699

-7

11,324

-19

48,514

-19

Source: FLA