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Total asset finance new business hit £2.64 billion October 2020, marking a 14% fall from October 2019, reveals new figures released by the UK Finance & Leasing Association (FLA).

According to the figures, every asset type experienced a fall in new business, with IT equipment finance being hit the worst. This group reached £164 million of new business in the month, 31% lower than the same period in the year before.

Similarly, the plant and machinery finance sector reported a fall in new business of 20% down to £493 million in October 2020. Over the same period, the commercial vehicle finance sector reported a fall in new business of 6%.

 Oct 2020 % change on prev. year12 months to Oct 2020% change of prev. year
Total FLA asset finance (£m) 2,639  -14 27,812 -22
By asset
Plant & machinery finance (£m) 493  -20 5,847 -21
Commercial vehicle finance (£m) 729  -6 7,028 -24
IT equipment finance (£m) 164  -31 2,641 -3
Business equipment finance (£m) 164  -17 1,836 -22
Car finance (£m) 748  -16 7,347 -27

In the announcement, the FLA stated that the uncertainty plaguing businesses across the UK has stemmed, at least in part, from the introduction of new restrictions to tackle rising coronavirus cases and the lack of a free trade agreement, resulting in a lesser demand for asset finance.

Geraldine Kilkelly, head of research and chief economist at the FLA, explained: “The outlook for the UK economy has improved with the promised rollout of a vaccine before Christmas. The asset finance industry is in an ideal position to support businesses as they make the investment needed to increase productivity and build a sustainable future post-crisis.”

Brokers suffer 14% plummet

The share of total asset finance new business occupied by brokers continued to shrink during the period, with broker-introduced finance new business reaching £556 million in October 2020, down 16% from the same month in the year before. Also, in the three months to October 2020, brokers managed £1.5 billion of new business, representing a 14% decline on the same three months in 2019.

 Oct 2020 % change on prev. year3 months to Oct 2020% change on prev. year12 months to Oct 2020% change on prev. year
Direct finance (£m)  1,185 -18 3,245 -17 12,545 -25
Broker-introduced finance (£m)  556 -16 1,493 -14 5,438 -20
Sales finance (£m)   733 -6 2,241 -6 7,945 -17

Consumer car finance new business in October 2020

Additional FLA figurework shows that the consumer car finance market had experienced a fall in new business volumes of 3% in October 2020 compared with the same month in 2019. In the 10 months leading up to October 2020, new business volumes in this market were 20% lower than the year before.

Breaking down the consumer car finance market into new and used cars, the FLA revealed that the consumer new car finance market reported a fall in new business volumes of 25% in the 10 months leading up to October 2020 compared with the same period in 2019.

Cars bought on finance by consumers through the point of sale

New businessOct 2020 % change on prev. year12 months to Oct 2020% change on prev. year
New cars
Value of advances (£m) 1,416  0 16,128 -17
Number of cars 63,647  -4 730,540 -22
Used cars
Value of advances (£m)  1,640 3 16,519 -10
Number of cars  125,965 -2 1,280,399 -14
Total cars 
Value of advances (£m)  3,056  2 32,647 -14
Number of cars  189,612  -3 2,010,939 -17

The percentage of private new car sales financed by FLA members in the twelve months to October 2020 was 94.1%, up from 91.7% in the same period in 2019.

The consumer used car finance market reported a fall in new business volumes of 2% in October 2020 compared with the same month in 2019. In the ten months to October 2020, new business volumes in this market fell by 17% compared with the same period in the previous year.

Cars bought on finance by businesses

New businessOct 2020% change on prev. year12 months to Oct 2020% change on prev. year
New cars
Number of cars  27,851 -24 274,789 -37
Used cars
Number of cars   5,450  21  57,581  3

Kilkelly added: “The fall in the used car market in October was the first since May, although the overall economic outlook has improved following the promised rollout of a vaccine before Christmas. Based on this more positive outlook, our latest research suggests that consumer car finance new business by value is likely to grow by 18% in 2021, following a contraction of 20% in 2020.”

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