Latest figures from the Finance & Leasing Association have revealed new car finance volumes grew by almost a quarter in January 2014 compared to a year ago.
The 24% increase in volumes comes on the back of a 20% rise for new car finance during the whole of 2013.
Used car finance was also up – 25% in January 2014 and 16% for the whole of 2013 compared to 2012. Indeed, the 915,000 used cars bought through dealer finance was the highest since 1999, reports the FLA.
The obvious driver is record-low interest rates, but Samantha Cripps, head of sales development at finance provider Alphera Financial Services, said other factors were contributing to the sustained growth in dealer finance penetration.
“Flexible PCP and modern HP finance promotions which focus on consumer lifestyle choices and affordability” are key, she said – and they’re likely to continue to perform well, certainly in the short term.
She did sound a warning, though: today’s ‘never had it so good’ affordability may not last forever. “With the Bank of England warning that interest rates could rise six-fold over the next three years, the cost of borrowing will inevitably go up.”
The March plate change month may thus be a record for dealer motor finance, then, but such magnetic deals may not be around forever… question is, how will the car industry respond? Or will the growing acceptance of PCP simply mean it’s here to stay even if deals aren’t quite as affordable as they once were?
A longer-term trend to watch, we feel…