January bad weather fails to freeze motor finance sales

The latest figures released by the Finance and Leasing Association have revealed that the return of the 17.5% VAT rate and heavy snowfall impacted on sales in January, but consumer new car finance sales were still up almost a quarter on last year

Consumers bought 23% more new cars using motor finance through dealers in January this year than in January 2009. But January 2009 was a particularly weak month for consumer new car finance volumes.

Consumer used car finance sales remain slow, with 19% fewer cars sold on dealer finance in January than the same period last year.

The return to the higher VAT rate in January impacted on all car sales.

Poor weather conditions meant that there were fewer customers visiting show rooms.

Business new car finance sales were also down by 23%, showing that businesses continue to make their current vehicle fleets last longer instead of replacing them.

Although down on last year’s highs, the motor finance market still accounts for over 45% of all private new car registrations.

Commenting on January’s motor finance figures, Geraldine Kilkelly, Head of Research and Chief Economist, said:

“While we have not seen the record new car finance growth levels witnessed in December, January was still a good month, up 23% on last year. The growth comes against abnormally low consumer new car finance sales in January of last year.

“The cold weather may have prevented consumers venturing out to car showrooms in January, and anyone thinking of purchasing a new car may have decided to wait for the ’10’ number plate, released on 1 March.”