On 11 April the FLA said that a “difficult” near-term economic outlook led to it reducing the sector’s value growth projection from 11% to seven percent.
This is despite data showing that, in February, the consumer car finance market had seen new business volumes rise 24% year-on-year. Volumes were up 34% year-to-date, and the value of new businesses grew by 39%.
But the Society of Motor Manufacturers and Traders (SMMT) reported last week that the UK’s new car registration figures for March had been the month’s poorest in 24 years.
According to Geraldine Kilkelly, director of research and chief economist at the FLA, the February figures were reflective of pent-up consumer demand, as well as “distorting effects” from the closure of showrooms and record-high growth in used car prices.
“The near-term economic outlook remains difficult as consumers and businesses face higher prices and increased costs across the board,” she said.
“The impacts of the squeeze on household disposable incomes and ongoing vehicle and component supply issues are reflected in our latest research which suggests that consumer car finance new business by value will grow by 7% in 2022, revised down from a growth forecast of 11% made in the final quarter of 2021”.
The FLA’s February market data showed consumer new finance up 15% by value and nine percent by volume compared with the same period in 2021.
In the first two months of 2022, new business volumes in this market were 30% higher than in the 2021.
The consumer used car finance market reported new business up 52% by value and 29% by volume in February compared with the same month in 2021, meanwhile, with new business volumes up 35% on the same period in 2021.