Despite a fall in sale volumes, the value of advances made by financing and leasing companies on cars was up 3 per cent in July at £1.21 billion and 1 per cent for the three months to July at £4.11 billion, an industry organisation reports.
“The fall in consumer car finance business volumes is consistent with recent trends in private new car registrations, and Finance & Leasing Association members’ penetration of this market remains stable,” Geraldine Kilkelly, head of research and chief economist at the FLA, said.
Ms Kilkelly said that the financing industry hoped vehicle scrappage schemes announced by leading car manufacturers in recent weeks would provide some boost to sales in the coming months and the FLA expected business volumes to be stable this year.
While new car sales might have slipped, financing by volume and value in the used car market have been rising. The number of used cars bought with finance from FLA members in July was up 10 per cent at 114,371 on the year and a total of £1.3 billion was provided to finance the purchase of second-hand cars, a rise of 17 per cent.
FLA members comprise the biggest car financiers, providing money for 86 per cent of private new car registrations. Car finance has risen up the political agenda this year amid concerns that Britons have been taking on too much personal debt and some financing packages could have been mis-sold.
Russ Mould, investment director at AJ Bell, the broker, said: “The weakness in cars does hint that bigger-ticket purchases are also coming under closer scrutiny as consumers watch their outgoings more closely.”
New car registrations dropped 6.4 per cent last month, according to figures this week, but the car industry has said that it does not believe the fall is any cause for concern.
Sue Robinson, director of the National Franchised Dealers Association, said: “We continue to anticipate a stable final quarter of the year for franchised dealers.”