UK buyers are shunning
new registrations and looking for second-hand bargains, reports
Fred Crawley.
Go deeper with GlobalData
Point of sale finance
providers are turning their attention to the used car sector, as
consumers are running out of incentives to stump up for new
vehicles.
Finance and Leasing
Association (FLA) statistics for August show sales of used cars
using dealer finance up 21 percent on the equivalent period in
2009. The value of advances was 24 percent up, at £513 million for
the month.
At the same time, however,
new car finance was down 12 percent to consumers, and 26 percent to
businesses. While August is traditionally a slow month for car
sales, this development gives particular cause for concern, given
that in August 2009 the UK was still deep in recession.
August last year did see new
car registrations buoyed by the developing scrappage scheme, but it
is widely accepted this had relatively little effect on finance
volumes in any case.
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By GlobalDataNow it seems that UK car
buyers are once more looking to curb their spending.
FLA head of motor finance
Paul Harrison said: “Following the withdrawal of a range of
incentives to ‘buy new’, consumers have returned to the used car
market where lower prices are attractive and buyers need to borrow
less.”
September’s figures may show
a recovery in new car finance due to the change in number plate,
but if general car sales statistics are anything to go by, this is
unlikely to materialise.
SMMT figures show September’s
car sales down 8.9 percent compared to the corresponding period
last year, marking a third consecutive month of
declines.
Harrison expects the decay in
new car finance to continue well into the final quarter, along with
the corresponding rise in used car finance.
He added it was uncertain
what, if any, positive impact the January VAT increase will have on
bringing forward sales to November and December.
Harrison said: “While we
expect sales of new cars, particularly prestige cars, to recover
slightly towards the end of the year as consumers seek to beat the
VAT increase, there is also the, as yet unknown, effect on consumer
confidence of October’s Comprehensive Spending Review.”
Dealer groups, too, are
almost universally reporting a shift in focus to concentrate more
on selling used cars.
Pendragon has said that it
will focus on profit from used car sales in the final quarter,
after the third quarter saw a 7 percent like-for-like increase in
used car sales and a 23.4 percent decline in new car sales. The
company expects used car sales to continue to improve over the next
quarter.
A Pendragon spokesperson said: “While the wider
macro-economic environment remains uncertain, we continue to
concentrate on the areas of the business where we have the greatest
opportunity to improve profitability and reduce debt.”
