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Car finance moves up a gear at last
publication date: Oct 15, 2009
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author/source: Robin Roberts
Sales of new cars bought by consumers using dealer
finance have grown for the first time since July 2008, according to
figures published today by the Finance & Leasing Association.
In August, the number of new cars sold with dealer finance to consumers increased by 4pc compared with the same month last year.
While this is welcome, a recent survey of FLA members confirmed that
the high cost and restricted availability of wholesale funds remains a
serious threat to the market.*
The Government's confirmation last month that it remains in discussion
with the European Commission about a guarantee scheme that might help
ease wholesale funding pressures was welcome. But a positive result
from these talks is now urgent.
Commenting on the figures, Geraldine Kilkelly, Head of Research and
Chief Economist at the FLA, said, "This is the first increase in dealer
finance provided to consumers for new cars in over a year. Motor
finance companies are telling us that the impact of the car scrappage
scheme on finance sales has been limited.
"Motorists tend to opt for
buying small cars and pay the balance from any part exchange under the
scrappage scheme with their savings, rather than by using car finance.
But dealer finance remains a popular option for consumers. Motor
finance companies are offering competitive deals, which are driving
sales. For the longer term health of the market, we still need to see
progress from the Government in dealing with the wholesale funding
issue."
In a recent survey of FLA members, 65pc said that the
threat to their businesses from the high cost of funding remained severe
Van prices continued to rise in September as BCA recorded yet another
strong month of average values. Following strong demand in the LCV
sector during August, September has followed suit with average values
rising to £3,862.
Once again average values for fleet & lease and dealer
part-exchange vans rose, and although values for nearly-new vans
slipped by £227, this appears to have been driven by model mix.
Following last months pattern, all three sectors achieved over 100pc of
CAP values.
According to BCA’s latest Pulse report, average used LCV values across
the board improved in September by £117 – over 3pc - month on month.
Values are now on a par with the peak of £3,868 recorded in January
2008. Year-on-year values are ahead by £672.
Average fleet & lease van values improved by £180 against August -
up by 4.4pc, following a 5.2pc rise the previous month. With values
reaching £4,225, the £4K barrier has now been breached by fleet and
lease vans for two consecutive months. Direct entered fleet stock
remains exceptionally desirable for both trade buyers and end users and
competition has been intense in the auction hall as good retail-ready
vans are in short supply. However, condition remains critical and
traders remain wary of ‘buying work’.
Dealer-entered part-exchange stock rose by £193 to £2,487 - an increase
of 8.4pc, following rises of 7.5pc and 9pc rise in the two previous
months. This sector is certainly benefiting from the shortage of good
quality stock available from fleet and lease sources.
Nearly-new values fell to £8,807 in September – a fall of £227 –
following an increase of over £1,000 in August. With supply relatively
limited, model mix has a greater effect here than in other sectors.
The real strength in the market can be seen in the average performance
against CAP, which improved on the 101.67pc highpoint recorded in
August to reach 104.66pc. For the second month running, all three
sectors averaged over 100pc of CAP in the same month, with fleet and
lease reaching 104.44pc, part-exchange vans realising 105.56pc and
nearly-new vans averaging 106.53pc. | |
● Vendors should expect to see increased demand for
delivery vehicles in the run-up to Christmas as digital retailers are
predicting the biggest Christmas ever for online sales.
Online sales increased by 16pc in August and major high street
retailers are reporting increases in excess of 20pc in the last quarter
alone.
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