The consumer car finance market has reported a fall in new business of 35 per cent in January.
Figures from the Finance and Leasing Association (FLA) show a decline on the same month in 2020, indicating that coronavirus lockdowns are negatively affecting the car buying market, despite ‘distance selling’ still being legal.
The decline was fairly evenly split between new and used cars, with the used car market reporting a drop of 34 per cent in the volume of cars financed to 87,557, while new car numbers were down 38 per cent to 36,134.
Geraldine Kilkelly, director of research and chief economist at the FLA, said: “The impact of the latest UK-wide lockdown restrictions has not been as severe as the first lockdown introduced last March with many dealerships able to offer click and collect or deliver services.
“The value of new business in the consumer car finance market is expected to fall by 16 per cent in Q1 2021 as a whole.
“Our latest research suggests that once showrooms reopen there will be a strong recovery in the consumer car finance market, with the value of new business expected to grow by 17 per cent in 2021, and a further 12 per cent growth forecast for 2022.”
Over the past 12 months, the number of new cars financed has gone down 27 per cent to 674,728, while the number of used cars finance policies has declined 20 per cent to less than 1.2 million.
Businesses are also turning away from financing cars in a tough economy, financing 19 per cent fewer new cars (21,542) in January than in 2020, with the 12-month rolling figure down 39 per cent.