With volumes still lower than last year it would appear that the scrappage scheme is having little impact on dealer finance sales, although the decline has been arrested somewhat in July, 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 and 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 408,500 new cars bought by consumers in the past 12 months, which was down 20 per cent compared with the previous 12 months.
Geraldine Kilkelly, the FLA’s chief economist said “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.