06 May 2013

Booming finance deals are behind the steady rise in new car sales to private customers in the last six months, according to the Finance and Leasing Association (FLA).

Figures to be released by the trade body next week will reveal new car finance supplied through dealerships to consumers grew 25% by value and 18% by volume in March. That’s well ahead of the 7.8% rise in unit sales, suggesting private customers are borrowing more money on more expensive cars than ever before.

Speaking at the organisation’s AGM last week, FLA director general, Stephen Sklaroff, said: ‘Consumer finance provided by FLA members has continued to grow and, in particular, by a 19% rise in motor finance (new and used) in Q1, which continues the double digit trend we’ve seen for some time.’

Mr Sklaroff noted the March figures mean that new car finance through dealerships to retail customers grew 29% by value and 22% by volume in the first quarter. And that FLA members’ penetration of the consumer new car market now stands at 73% in the twelve months to March, up from 66% during the same period in 2012.

Continuing low base rates are behind some of the deals with more and more manufacturer ‘captive’ finance companies offering long term, low rate loans; up to five years in the case of Vauxhall, for instance.

But figures out this week from Experian suggest more and more owners are settling their finance early and some fleet and short-term daily rental operators are beginning to express concern about the knock-on effect on nearly new residual values.

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Tags: 13-reg, 62-reg, finance, FLA, loans, new car sales, sales boom