Navigating the Shifting Tides of Consumer Car Finance: Insights and Strategies for the Road Ahead

The consumer car finance market has experienced a dynamic shift in recent months, with new business volumes and values fluctuating across the industry. As the Finance & Leasing Association (FLA) releases its latest figures, it's crucial to delve into the nuances of this evolving landscape and uncover the key trends shaping the future of the sector.

Unlocking the Potential: Navigating the Changing Tides of Consumer Car Finance

Navigating the Ebb and Flow of New Business Volumes

The latest data from the FLA reveals a mixed picture for the consumer car finance market. While new business by value in the consumer new car finance segment saw a 6% increase in May 2024 compared to the same period in 2023, the overall new business volumes fell by 2%. This suggests a shift in consumer preferences and financing patterns, with a potential increase in the average value of new car purchases.In contrast, the consumer used car finance market experienced a more pronounced decline, with the value of new business falling by 10% and new business volumes decreasing by 5% in May 2024 compared to the same month in the previous year. This trend could be attributed to a range of factors, including economic uncertainty, changes in consumer behavior, and the ongoing impact of the pandemic on the used car market.

Exploring the Resilience of the Point-of-Sale (POS) Consumer Car Finance Market

Despite the overall decline in new business volumes, the FLA's research suggests that the POS consumer car finance market has shown resilience, with only a slight fall in new business volumes in 2024 so far. This resilience can be attributed to several factors, including improved consumer confidence as real earnings continue to grow and the prospect of lower interest rates.Interestingly, the finance penetration of the private new Battery Electric Vehicles (BEVs) market has continued to improve, although the most popular way of obtaining a new BEV remains through a salary sacrifice scheme. This trend highlights the evolving preferences and financing options available to consumers in the rapidly changing automotive landscape.

Navigating the Challenges and Opportunities Ahead

As the consumer car finance market navigates these shifting tides, industry experts have provided valuable insights and forecasts. The FLA's latest research suggests that the POS consumer car finance market is expected to see new business by value hold steady in 2024 at around £39 billion, supported by the factors mentioned earlier.However, the industry is not without its challenges. Customers who are worried about meeting their payments should be encouraged to speak to their lender as soon as possible to find a solution. This proactive approach can help mitigate the impact of financial difficulties and maintain the health of the overall market.Furthermore, the industry must continue to adapt to the evolving needs and preferences of consumers, particularly in the rapidly growing electric vehicle (EV) segment. Innovative financing solutions and a deeper understanding of consumer behavior will be crucial in navigating the road ahead.In conclusion, the consumer car finance market is experiencing a dynamic period of change, with both challenges and opportunities on the horizon. By staying attuned to the latest trends, leveraging industry insights, and fostering strong customer relationships, industry players can navigate these shifting tides and position themselves for long-term success in the ever-evolving automotive finance landscape.