Used Car Dealers See Growth In Business Sales

Used car retailers sold more units to businesses on finance in the year to October with a 3% sector gain exactly mirroring the percentage drop in orders for brand new vehicles paid for through a point-of-sale funding package.

New figures released by the Finance & Leasing Association (FLA) show that although there has been a recent slowing in finance sales to businesses overall, more than 60,000 cars and vans paid for by dealer-sourced finance were chosen from second-hand stock in the period. Although that figure is dwarfed by the 394,000 ordered and delivered that way from new cars and vans, there was a measurable swing away from new to used.

October itself saw a collapse with a fall of 46% and there was a 15% drop in Q3 as industry waited for clarity on the election and Brexit but the September 2018 to October 2019 timeframe did register the 3% gain.

Leaving this month aside, there were more gains in finance-led sales from dealers in the second-hand arena with a two percentage point gain in both Q3 and the 12 months-to-October measurement.

Used car and van market should see some growth

Dealers are also seeing higher volumes of POS finance going through with improvements of 3 and 4% respectively in the value of advances over the two longer periods.

The FLA says it sees reason for optimism as the trade goes into the new year now there is more stability at Westminster and forecasts that while there may well still be trouble moving brand new metal, the used car and van market should see some growth.

Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said:

“The consumer car finance market is on track to report new business volumes in 2019 as a whole of around 2.4 million cars, a similar level to 2018.

“Consumer confidence should improve as uncertainty about the economic outlook reduces, which will help support demand for car finance next year. New business volumes in the consumer car finance market are likely to remain stable in 2020, with a modest fall in new business volumes in the new car finance market offset by single-digit growth in the used car finance market.”