New business volumes in the consumer car finance market fell 20% in July 2021 compared with the same month in 2020, while the value of new business decreased by 19%. new figures from the Finance & Leasing Association (FLA) have revealed. In the first seven months of 2021, new business volumes were 20% higher than in the same period last year.
The consumer used car finance market reported a fall in new business volumes of 19% in July compared with the same month in 2020, while the value of new business decreased by 16%. In the first seven months of 2021, new business volumes in this market were also 20% higher than in the same period in 2020.
Commenting on the figures, Geraldine Kilkelly, FLA director of research and chief economist, said: “Supply side shortages – both of vehicles and labour – have hit the automotive industry in recent months. With most consumer new car sales now financed by FLA members it is not surprising that the consumer new car finance market followed recent trends in private new car registrations which fell by a quarter in July. Moreover, July 2020 was a record month for the consumer used car finance market following the lifting of the first lockdown restrictions which was unlikely to be replicated this year.
“Our latest research suggests consumer car finance new business by value will grow by 17% in 2021 as a whole, slightly lower than previous expectations. The consumer car finance market is expected to growth by a further 14% in 2022 as supply constraints gradually ease and strong consumer demand continues.”
The FLA’s research shows that total asset finance new business (primarily leasing and hire purchase) grew by 3% in July 2021 compared with the same month in 2020. In the first seven months of 2021, new business was 24% higher than in the same period in 2020.
The business equipment finance and plant and machinery finance sectors reported new business up in July by 47% and 10% respectively, compared with the same month in 2020. Over the same period, new business in the IT equipment finance sector fell by 51%.
Kilkelly said: “Overall growth in the asset finance market slowed in July, but many asset sectors and new business channels continued to report robust recoveries. New finance provided for agriculture and construction equipment each grew by 24% in July and annual new business in the broker and vendor finance channels has almost reached pre-pandemic levels.
“The current shortage of assets available to finance – particularly in the automotive, machinery and electronic sectors – is weighing on the recovery of the industry and the wide economy. Nevertheless, the rebound of the asset finance market so far this year demonstrates its underlying strength and points to further growth in the year ahead.”