Car finance new business fell 7% year-on-year to £3.9bn in September, as lower car deliveries from manufacturers dragged on point-of-sale lending volumes, according to figures from the Financing and Leasing Association (FLA).
The retail new car segment saw £2.5bn in business written during the month, down 14% year-on-year, along with a 16% drop in volumes, to 123,173 contracts.
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Used cars fared better, albeit not enough to offset the overall fall. Advances totalled £1.4bn, up 9%, and contracts rose 3% to 117,543 deals.
“Recent trends in the POS consumer new car finance market have reflected those for private new car sales which have been affected by changes to emission standards introduced in September,” said Geraldine Kilkelly, head of research and chief economist at the FLA.
She added: “The POS consumer car finance market overall reported new business volumes up by 3% in the first nine months of 2018, in line with expectations of single-digit growth for the year as a whole.”
The European motor finance sector has been hit by a slowdown in sales in Q3, as manufacturers struggle to get vehicle through emission testing timely under the new WLTP procedure.
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By GlobalDataThe Society for Motor Manufacturers and Traders recorded 338,834 registrations in September, down 20.5% year-on-year. Daimler, BMW and Volkswagen all reported slowdowns in sales and captive finance in their third-quarter results.
In Britain, problems arising from the OEM side have been exacerbated by economic uncertainty ahead of Brexit and a rise in Vehicle Excise Duty (VED). The Bank of England singled out low car finance turnover as the main contributor to a fall in consumer credit in September.
On the other hand, shortage in the new car space have been benefitting the second-hand market, with used stock prices at dealer auctions going up over £1,000 over the last six months, according to auctioneer Aston Barclay.
“We believe the high demand and rising prices in the late and low and fleet sectors will continue until the WLTP new car supply challenges have been resolved, which could be Spring 2019,” Martin Potter, group operations director at Aston Barclay, said on Wednesday.
| Table 1: Cars bought on finance by consumers through dealerships | ||||||
| New business | Sep 2018 | % change on prev. year | 3 months to Sep 2018 | % change on prev. year | 12 months to Sep 2018 | % change on prev. year |
| New cars | ||||||
| Value of advances (£m) | 2,526 | -14 | 4,877 | -4 | 19,314 | +2 |
| Number of cars | 123,173 | -16 | 242,927 | -6 | 963,771 | -5 |
| Used cars | ||||||
| Value of advances (£m) | 1,460 | +9 | 4,527 | +12 | 17,184 | +14 |
| Number of cars | 117,543 | +3 | 371,010 | +6 | 1,444,464 | +8 |
| Total cars | ||||||
| Value of advances (£m) | 3,985 | -7 | 9,404 | +4 | 36,498 | +7 |
| Number of cars | 240,716 | -7 | 613,937 | +1 | 2,408,235 | +2 |
| Table 2: Cars bought on finance by businesses | ||||||
| New business | Sep 2018 | % change on prev. year | 3 months to Sep 2018 | % change on prev. year | 12 months to Sep 2018 | % change on prev. year |
| New cars | ||||||
| Number of cars | 31,301 | -22 | 98,347 | -15 | 431,842 | -10 |
| Used cars | ||||||
| Number of cars | 4,515 | +25 | 12,915 | -17 | 55,116 | -6 |
