New car finance is set to grow by 17% this year and a further 14% in 2022, as supply restraints ease and dealers cater for strong pent-up consumer demand.

That is the view of the Finance & Leasing Assocation which today released figures for the car finance market in July.

Geraldine Kilkelly, director of research and chief economist at the FLA, said: “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 consumer new car finance market reported a fall in new business volumes of 20% in July compared with the same month in 2020.

The value of new car business at the point of sale decreased by 19%, according to figures from the Finance & Leasing Association.

In the first seven months of 2021, new business volumes in this market remained 20% higher than in the same period in 2020.

The percentage of private new car sales financed by FLA members in the twelve months to July 2021 was 93.6%, up from 93.2% in June.

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.

Kilkelly 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.”

 

Table 1: Cars bought on finance by consumers through the point of sale
New business Jul 2021 % change on prev. year 3 months to Jul 2021 % change on prev. year 12 months to Jul 2021 % change on prev. year
New cars
Value of advances (£m) 1,385 -19 4,783 43 17,897 13
Number of cars 60,520 -20 205,166 38 770,753 6
Used cars
Value of advances (£m) 1,652 -16 5,180 28 18,333 14
Number of cars 119,273 -19 380,070 24 1,374,554 9
Total cars
Value of advances (£m) 3,037 -18 9,963 35 36,230 14
Number of cars 179,793 -20 585,236 29 2,145,307 8
Table 2: Cars bought on finance by businesses
New business Jul 2021 % change on prev. year 3 months to Jul 2021 % change on prev. year 12 months to Jul 2021 % change on prev. year
New cars
Number of cars 27,647 13 89,437 101 321,827 12
Used cars
Number of cars 3,914 -26 11,461 0 52,299 -7