Heavy promotion of low cost deals by manufacturer finance houses has brought private buyers back into dealers for car loans. But franchised and independent retailers are continuing to lose ground to direct lenders in used car finance.

The latest figures from the Finance & Leasing Association reveal new car finance to consumers at the point of sale was up by 18% in the three months to the end of May. Over the same period, new car unit sales to private buyers were up around 15.5%, indicating that point of sale finance grew its market share.

However, the picture is less bright in the used car market. Retail buyer finance is down by 3% over the three-month period and by 15% over 12 months. Although precise figures of used car sales are impossible to obtain, most dealers have reported a buoyant market with consistently high demand.

The figures suggest heavily promoted new car finance deals, such as low rate PCPs or 0% finance, are having an effect. Most new cars are financed through manufacturers' own 'captive' finance houses which are able to offset low rates against volume bonuses and other marketing budgets.

At the same time, many private new car buyers are funding their vehicles through PCP schemes where a replacement cycle is naturally in place and there is little opportunity for direct lenders to break in.

In the used car market, manufacturer captives and independent finance houses are investing heavily in technology in order to offer customers instant funding decisions and the option to 'see, buy and drive away' on the same day. But heavy advertising by direct lenders in the run-up to September is likely to see them grow their market share still further.