Finance prices rise as carmakers ease off in Q2

Funding a vehicle through retail finance offers has become more expensive in Q2, with average monthly payments increasing by 4%, from £311.40 to an average of £324 a month.

According to AM’s analysis of 288 manufacturer representative retail offers from their websites, price increases are across the board, with average deposits up by 16% to £6,092 and average balloon payments up by 11.3% to an average of £12,929.

The level of 0% offers across the industry has also dropped 19%, with 51 vehicles available with no interest, compared with 63 offers in Q1.

The manufacturer finance houses will be generating higher margins on cars funded throughout Q2, as the average APR has also increased from 3.78% in Q1 to 4.28%.

Part of this is seasonal, as manufacturers are not pursuing customers quite as aggressively as in Q1 for the plate-change month.

The market is not moving radically – nearly two thirds (63%) of all offers are priced either at or below that £324 average monthly price for Q2.

There is also a trend in Q2 towards four-year offers, with almost 70% of the market’s representative examples calculated at 48 months.

Dacia maintains the lowest-priced offer again in Q2, with its Sandero at £79 a month. The Mitsubishi Eclipse Cross is close behind at £79.78 and while it attracts a much higher deposit of £9,398 for its offer, it is available at 0%.

The S-Class 560 AMG Line Coupé is at the other end of the spectrum, with a monthly payment of £1,189, making it the most expensive model by monthly payment in Q2. The cost isn’t surprising for such a premium, performance Mercedes and most of the more expensive end of the table is premium niche products, but there are some outliers.

Kia has its e-Niro in the second half of the table with an offer at £517.12 a month and the Stinger at £534.64. This puts these models in close company with an Audi A7 Sportback and Audi RS 3 in terms of monthly affordability.

Citroën takes the title for the highest APR rate in Q2 at nearly 8% on the Citroën C4 Cactus. The Seat Mii also attracts a higher APR than average at 7.3%, while Audi, Range Rover and Mitsubishi are all pushing higher APRs on their niche products.

Diesel’s decline continued in Q1 by 20.3% and, anecdotally, many of the representative examples show the petrol engine example first to consumers browsing online. Petrol and alternative fuel vehicle (AFV) registrations are just about picking up the slack from diesel.

Toyota has the most affordable hybrid, with a 0% offer at £189 a month for its Yaris Hybrid Icon Tech. The Renault Zoe is the only pure EV on the most affordable AFV list at £199 (excluding a £69-a-month battery rental fee). This puts into perspective how far away pure EVs still are from the mainstream, with no other manufacturer able to put a representative example retail offer together (other than Renault) that sits below the national average of £324.

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