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But the Finance and Leasing Association is hopeful of improvement as lockdown is eased.
The UK private car finance market fell by more than a quarter in February as the coronavirus lockdown cut sales. With dealers forced to close their doors to all but intrepid click-and-collect buyers, the Finance and Leasing Association (FLA) says the new car finance market was hit particularly hard.
That's no surprise given the FLA says around 93 percent of all consumer new car sales were financed through its members in the 12 months to February. Nevertheless, the organisation says it's confident of a "rebound" in the market when lockdown begins to lift this month.
Dealers and financiers will certainly be hoping that's the case after February saw the market contract by 27 percent compared with the same month last year. That meant the number of new and used cars financed by private customers slumped to just over 123,000.
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The consumer new car finance market bore the brunt of the drop, with the number of new cars bought on finance falling to 29,252 in the second month of 2021. That was down 34 percent on the same month in 2020, which predated the UK coronavirus lockdown.
As a result, the value of the advances handed out by finance companies also fell to £659 million. Coincidentally, that's a 27 percent reduction in value compared with the same month in 2020.
© Motor1.com UKUsed Jaguar XJ outside Jaguar Land Rover showroom in Cardiff
But the private used car market didn't get away scot-free. Almost 94,000 used cars were financed by private customers in February, and that's down 25 percent compared with February 2020. Unsurprisingly, that meant the value of advances also fell, and the 23-percent reduction saw finance companies dole out £1.24 billion in advances.
Overall, therefore, the market was down 27 percent in terms of volume, but the market value did not fall quite so dramatically. With finance companies handing out advances totalling more than £1.9 billion for private customers, the market only contracted by 24 percent in value terms.
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Geraldine Kilkelly, director of research and chief economist at the FLA, said the lockdown had kept the market below previously-seen levels, but the reopening of dealers could signal an improvement in the industry's fortunes.
"The UK lockdown restrictions over the winter months contributed to a fall in consumer car finance new business volumes of just over a quarter," she said. "As car showrooms re-open and consumer confidence recovers, we expect a strong rebound in demand. The value of annual new business in the consumer car finance market is expected to reach its pre-pandemic level this year."
© Motor1.com UKHappy man smiling at his new car in dealership showroom