The finance industry funded more than 20,000 demonstrator cars in March. The figure, up from 13,366 cars in March 1999, reveals the true extent to which new car registration figures are being manipulated by carmakers and dealers.

According to the latest official figures from the Finance and Leasing Association (FLA) more than 168,000 demonstrator cars have been financed in the past 12 months. That is double the figure funded over the previous 12-month period.

FLA members finance almost 53% of all new cars registered in the UK. The association defines demonstrators as cars registered to dealers or manufacturers on short-term finance plans.

The increased funding of preregistered demonstrator cars masks a serious fall in the number of retail customers applying for new car finance during what should be the busiest month of the year. New car retail finance was down by 9% on the same month last year, at £709m.

The used car retail finance market is being hit even harder by lack of demand. Used car retail finance is down by 16% to £521m on the month, though it is static over the past 12 months. The figures contrast sharply with the situation a year ago when retail car finance was still growing strongly.

There has been some recovery in new car business finance which showed a 6% increase in March to £699m, but the total for the past 12 months is down 3% and the number of business cars financed in March only rose by 3%, suggesting companies are paying more for their vehicles.