Car finance volumes fall in May as registrations dip

Consumer car finance new business volumes fell by 3% in May compared with the same month in the previous year, according to the latest figures from the Finance & Leasing Association (FLA).

The value of new business fell by 1% during the same period (see table below).

Geraldine Kilkelly, head of research and chief economist at the FLA, said “The POS consumer car finance market reported new business volumes of almost 1.1 million in the first five months of 2019, only 1% lower than in the same period in 2018.”

“We continue to expect broadly stable new business volumes in 2019 as a whole.  Consumer confidence about their own personal finances remains relatively strong, supported by a resilient labour market and low interest rate environment.”

The new car market led to the largest decline in May’s figures with a 4% drop in the number of new cars financed. This correlates with new car registrations, which were down 4.6% in the same month, according to the SMMT.

The SMMT said that the fall reflects continued uncertainty over diesel and clean air zones as well as the removal of incentives for plug-in hybrid vehicles.

The value of consumer used car finance new business in May was a similar level to the same month in 2018, while new business volumes fell by 3%.

This reflects the relative flat-line of the used car market seen in the first quarter of 2019.