Point of sale finance now funds 49 per cent of all new private car sales, compared to 47 per cent in 2007, according to the Finance and Leasing Association.
FLA head of motor finance Paul Harrison said: “FLA statistics show point-of-sale motor finance has remained attractive to customers during current tight credit conditions.
“It has grown in popularity in 2008, as consumers are finding it more difficult to get credit elsewhere. Pos products will prove invaluable for individuals and businesses in the months ahead.”
Peter Cooke, professor of automotive management at the University of Buckingham, agreed, saying dealers could move this source of profit forward by focusing on used as well as new cars.
“Finance adverts at the moment primarily focus on new vehicles,” he said. “But I’ve always looked at it as a supply chain.
“If someone wants to buy a new car, chances are they already have a used car – so they need to realise the equity of that used car to fund the new vehicle.
“Dealers need to be able to ensure their buyers have access to funding, so it’s going to be very important that used vehicles continue to be moved because of that release of equity.”
The FLA’s figures showing an increase in PoS finance reflect a break in a trend, according to a forthcoming report to be published by Cooke and finance provider Black Horse.
Black Horse said the report highlighted a long-term drop in PoS finance sales over the ten years leading up to 2006 and concludes that the sector is currently at a crossroads.
According to Black Horse, from 1996 to 2006, new private car finance fell from 52 per cent of cars sold to 41 per cent.
Used car finance penetration, meanwhile, fell from 53 per cent to 30 per cent by 2006.