According to data from trade association the Finance and Leasing Association, the car finance market is one sector which showed a return to year-on-year growth in its July 2020 figures, even if other credit markets remain in the doldrums.
In July, new motor finance business by value was 20% higher than was the case in July 2019, and new business by volume was 9% higher than was the case 12 months previously.
Used car business also grew by 18% by value and 9% by volume in July 2020, when compared to July 2019.
Together, this means that the sector saw business by value grow by 19% and business by volume grow by 9%.
However, new business volumes in the car market for the first seven months of 2020 were still 30% lower than for the equivalent period in 2019.
Other FLA data suggests that other areas of the credit market are still struggling to recover from the effects of the pandemic.
Retail store and new online credit business grew by just 1% in July 2020, compared to July of the previous year.
Credit card and personal loan new business fell by 29% in July 2020 when compared to the same month in 2019 and was down by 22% when we compare the first seven months of 2019 and 2020.
Overall, consumer finance new business was 9% lower in July 2020 than in the same month in 2019 and decreased by 23% in the first seven months of 2020.
Total asset finance new business (such as leasing and hire purchase) fell by 22% in July 2020 compared with the same month in 2019. In the seven months to July 2020, new business was down by as much as 31% when measured against the same period in 2019.
Geraldine Kelly, head of research and chief economist at the FLA, said:
“The pick-up in the economy since June has been encouraging, but the sustainability of the recovery remains in doubt.
“The consumer finance market is gradually recovering, with both the consumer car finance and retail store and online credit sectors reporting growth in July. The pick-up in the economy since June has been encouraging, but the sustainability of the recovery is in doubt. Our latest research suggests that the overall consumer credit market in the UK is likely to see new lending fall by around 21% in 2020 as a whole.
“We continue to urge the government and the Bank of England to ensure that there is adequate support for all lenders so that they can meet the ongoing demand from customers for forbearance and at the same time meet demand for new credit during what will be a difficult period for the economy.”
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