New car finance volume and value drops by 3% in first half of 2024

New car finance business volumes and value both dropped by 3% over the first half of 2024, according to the latest data from the Finance & Leasing Association (FLA).

Figures for June show new car finance business volumes fell by 11% year-on-year, while the corresponding value of new business also dropped by 10% for the month year-on-year.

The value of new business in the consumer used car finance market saw a drop of 13% YoY, while new business volumes fell by 10%.

Used car finance volumes dropped by 1% overall across the first six months of the year.

Geraldine Kilkelly, director of research and chief economist at the FLA, said the falls have been modest in the face of challenging economic conditions.

Kilkelly said: “The fall in the consumer new car finance market reflects trends in private new car sales and the shift by consumers to using salary sacrifice schemes to finance new battery electric vehicle purchases.”

The FLA’s latest research suggests the value of new business in the consumer car finance market will fall by 1% in 2024 to £38.5 billion, reflecting growth of 1% in the consumer new car finance market to £17.1 billion and a 3% fall in the consumer used car finance market to £21.4 billion.

Mark Attwell, director at AA Car Finance, said the decline in new car purchases by some private buyers, hit by the cost-of-living crisis, could have dampened finance-backed car deals in June.

He said: "While inflation is easing, many consumers remain cautious about making significant purchases such as cars or homes.

"However, the Bank of England's decision to lower the base rate could boost consumer confidence in the coming months and help to reinvigorate the car finance market."

Attwell added that while the new car market is posting growth, this is still being driven primarily by strong fleet sales.

As a result, AA Car Finance is still seeing a trend of some individual drivers postponing their car-buying plans as they await more favourable economic conditions and a reduction in the strain on their personal finances.

Atwell concluded: "As we move into the latter half of 2024, with inflation remaining steady and the potential for another interest rate cut later this year, we anticipate a resurgence in finance-backed car sales.
 
“Car finance options offer a viable solution for budget-conscious buyers, providing access to newer, more efficient, or electric vehicles that might otherwise be beyond their reach."