Consumer spending is expected to remain subdued in the coming months despite the recent cut in interest rates.
That’s the view of the Finance & Leasing Association (FLA), which said over 40% of motor finance houses expected some increase in business in the coming months.
The consumer new car finance market reported new business by value in December 15% higher than in the same month in 2023, while new business volumes grew by 7%. In 2024 overall, new business volumes in this market were 2% lower than in 2023.
The consumer used car finance market reported a fall in the value of new business in December of 2% compared with the same month in 2023, while new business volumes decreased by 4%.
In 2024 overall, new business volumes in this market were 1% lower than in 2023.
Geraldine Kilkelly, director of research and chief economist at the FLA, said: “The consumer car finance market ended the year on a positive note with a second consecutive month of growth in the value of new business.
“In 2024 overall, new business by value reached £39bn, a similar level to 2023, while new business volumes fell by only 2% to 2.1 million.
“The recent cut in Bank rate will help to ease the pressure on household incomes but consumer spending is expected to remain subdued.
FLA’s latest industry outlook survey suggested that over 40% of motor finance respondents expected some increase in new business over the next year.
| Table 1: Cars bought on finance by consumers through the point of sale | ||||||
| New business | Dec 2024 | %
change on prev. year |
3 months to Dec 2024 |
% change on prev. year | 12 months to Dec 2024 | % change on prev. year |
| New cars | ||||||
| Value of advances (£m) | 1,254 | 15 | 4,041 | 8 | 17,706 | 5 |
| Number of cars | 41,205 | 7 | 137,754 | 1 | 627,257 | -2 |
| Used cars | ||||||
| Value of advances (£m) | 1,303 | -2 | 4,667 | -2 | 21,281 | -4 |
| Number of cars | 84,607 | -4 | 308,419 | -3 | 1,438,805 | -1 |
| Total cars | ||||||
| Value of advances (£m) | 2,557 | 6 | 8,708 | 2 | 38,988 | 0 |
| Number of cars | 125,812 | 0 | 446,173 | -2 | 2,066,062 | -2 |
| Table 2: Cars bought on finance by businesses | ||||||
| New business | Dec 2024 | %
change on prev. year |
3
months to Dec 2024 |
% change on prev. year | 12 months to Dec 2024 | % change on prev. year |
| New cars | ||||||
| Number of cars | 29,829 | -10 | 91,654 | -9 | 351,100 | -6 |
| Used cars | ||||||
| Number of cars | 3,479 | -30 | 11,631 | -30 | 55,545 | -11 |
