F&I Management & Training

Scrappage is having little impact on dealer finance sales with volumes lower than last year, although the rate of contraction recorded in July is the smallest this year, according to the latest figures from the Finance & Leasing Association (FLA).

The FLA said the slight improvement was due to increased competition in the motor finance sector and noted the scrappage scheme "appears to have had limited impact on dealer-financed sales of cars".
Although the cost of wholesale funding remains high, lenders are competing to offer good credit deals in the showrooms.

The number of new cars bought by consumers with dealer finance fell by 4 per cent year-on-year in July. The number of used cars bought by consumers using dealer finance fell by 7 per cent over the same period.
The FLA said its members provided finance for over 408,500new cars bought by consumers in the past 12 months, which was down 20 per cent compared with the previous 12 months.

Small boost for business finance
The business new car finance market showed a low level of growth - up 5 per cent in July compared with the same time last year. But over the past 12 months, this market was down by 23 per cent on the previous year.

"The slight improvement in motor finance volumes in July may in part reflect the impact of the car scrappage scheme. But there is no evidence that scrappage accounted for more than a small number of finance deals on mostly smaller cars," said Geraldine Kilkelly, the FLA's chief economist.

"Motor finance companies still need a long-term and sustainable market for affordable wholesale funds. Otherwise, with or without the scrappage scheme incentive, it will be difficult for the industry to continue to offer good motor finance deals in response to rising demand," she said.

DATED: 15.09.09

FEED: MT