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Asset finance new business fell by 41% in June 2020 compared with the same month in 2019, as recorded by members of the UK Finance & Leasing Association (FLA).

The figures revealed that the plant and machinery finance and commercial vehicle finance sectors reported falls in new business in June 2020 of 28% and 44% respectively, compared with the same month in 2019.

When the pandemic began taking its toll on the economy in May, asset finance new business plummeted to a low of £1.2 billion, rising again to £2 billion in June. It is likely that this growth following the crisis-low in May is due to the traditionally strong month of June. However, many businesses were still closed at this time and so new business was more than 40% lower than June 2019, and new business ended up falling 32% in the first half of 2020 compared with the same period in 2019.

 June 2020% change on prev. year3 mths to June 2020% change on prev. year12 mths to June 2020% change on prev. year
Total FLA asset finance (£m) 1,989  -41 4,795 -49 29,715 -15
Data Extracts by asset:
Plant and machinery finance (£m) 452  -28  1,252 -34  6,363  -13 
Commercial vehicle finance (£m) 481  -44  1,077  -57  7,364  -20 
IT equipment finance (£m) 226  -14  547  -12  2,817 
Business equipment finance (£m) 119  -36  335 -40 2,038  -15 
Car finance (£m) 452  -51  1,026  -64  7,835  -21 
By product
Finance leasing (£m) 268  -24  638  -40  3,743  -16 
Operating leasing (£m) 390  -33  761  -58  5,768  -17 
Lease-Hire purchase (£m) 1,001  -44  2,621  -50  15,844  -17 
Other finance (£m) 231  -38  630  -24  3,277 

Consumer used car finance leading recovery

Looking closer at automotive finance, the figures revealed that new business in the consumer used car finance market grew by 9% in value and 2% in volume in June 2020, compared with the same month in 2019. In H1 2020, the market reported new business volumes 32% lower than in the same period in 2019.

Comparatively, the consumer new car finance market reported a fall in new business of 16% in value and 21% in volume in June 2020 compared with the same month in 2019. New car finance new business volumes in H1 2020 fell by 42% compared to the same period in 2019.

Following the re-opening of showrooms, used car finance picked up with monthly new business volumes back to normal levels following the record low in April.

The FLA noted that new car finance took a little longer to bounce back, suggesting that new car registration figures show the market returning to growth in July.

Geraldine Kilkelly, head of research and chief economist at the FLA, explained: “While the latest FLA figures are encouraging, the economic outlook remains highly uncertain. The motor finance market is faced with a prolonged period of significant demand for forbearance. To meet this and the pent-up demand for new credit, we continue to urge the government and Bank of England to ensure that all lenders, including non-banks, have access to financial support schemes.”

Cars bought on finance by consumers through the point of sale

New businessJune 2020% change on prev. year3 mths to June 2020% change on prev. year12 mths to June 2020% change on prev. year
New cars
Value of advances (£m) 1,397  -16 1,695 -65 15,543 -20
Number of cars 62,912  -21 76,253 -67 721,134 -24
Used cars
Value of advances (£m) 1,604  9 2,171 -53 15,637 -13
Number of cars 121,935  2 167,801 -56 1,243,777 -15
Total cars
Value of advances (£m) 3,001  -4  3,866  -59  31,180  -16 
Number of cars 184,847  -7  244,054  -60  1,964,911  -18 

Cars bought on finance by business

New businessJune 2020% change on prev. year3 mths to June 2020% change on prev. year12 mths to June 2020% change on prev. year
New cars
Number of cars 13,195 -67  31,536 -76 308,631 -30
Used cars 
Number of cars  3,555 -41 14,740 5 54,655 -6

 

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