Car finance fell by 7% in November

New figures released by the Finance & Leasing Association (FLA) show that consumer car finance new business volumes fell in November 2023 by 7% compared with the same month in 2022. The corresponding value of new business was 5% lower over the same period.  In the eleven months to November 2023, new business volumes were 6% lower than in the same period in 2022.

The consumer new car finance market reported a fall in new business in November of 4% by value and 9% by volume compared with the same month in 2022.  In the eleven months to November 2023, new business volumes in this market were 5% lower than in the same period in 2022.

The consumer used car finance market reported a fall in new business in November of 6% both by value and volume compared with the same month in 2022.  In the eleven months to November 2023, new business volumes in this market were 6% lower than in the same period in 2022.

Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said “The consumer car finance market is on track to report annual new business by value and volume of £39 billion and 2.1 million cars in 2023.

“Better news on inflation and interest rates has provided more certainty for consumers, but the adverse impact of previous rises in these measures on household disposable incomes means consumer spending is likely to remain subdued in the near-term.  The FLA’s Q4 2023 Industry Outlook Survey suggests that 70% of motor finance respondents, including fleet, expect some increase in new business over the next year, down from 73% in the Q3 2023 survey.”

Mark Attwell, Director at AA Car Finance, said “After a year of financial pressures, budget-conscious drivers postponed finance-backed car purchases in November.

“Despite the 7% year-on-year decline in car finance agreements, the motoring sector remains resilient, with new and used car sales still on the rise. In 2023, total sales of new cars finished nearly 18% higher than in 2022, marking seventeen straight months of growth.

“The improved supply of new cars making their way onto forecourts is also helping to bolster overall sales, with a 14.8% surge in vehicles manufactured in November compared to the same month in 2022. Meanwhile, the price of many used cars has begun to fall, making it even more affordable to purchase a second-hand vehicle.

“With more makes and models to choose from, drivers who were waiting for their perfect car may find now is a good time to commit to a purchase.

“The economy appears to be in a more positive position with inflation easing, leading to growing consumer confidence. This in turn should make car finance an increasingly attractive option in the first part of the year.”