September, the year’s second biggest month for new car registrations, was a struggle for finance companies and their associated dealers.

The main reason was the increase in base rates in August to 4.75%.

This deflated the market and left dealers struggling to sell cars despite the many incentivization programmes financed by manufacturers.

Carmakers were making late decisions on finance programmes for the fourth quarter, when autumn deflates sales and the year ends with concentration on Christmas shopping.

It appeared that manufacturers were delaying their Q4 offers until they could assess the success of last month’s new ’56 plate.

AM went to press before the September registration figures were released, but dealers suggest carmakers would need to offer zero per cent finance deals and other inducements in the last three months of the year.

Brendan Devine, managing director of GE Money Motor Finance, says: “The early signs in September were that new car sales were proving hard to find.

“The increase in base rates and concerns about the cost of living appear to have dampened consumer confidence in discretionary purchases, such as cars.”

Devine’s assessment is that the significant increase in utility costs for home owners was one of the prime reasons for reluctance to enter dealers’ showrooms.

“There is still much that can be done to rise above any gloom over sales figures and we encourage dealers to highlight the affordability of buying a car.”

GE Money Motor Finance has urged dealers to see the low loan rates that are available to them. “I think many of us have forgotten that we continue to live in a low inflation, low interest economy and that borrowing money responsibly has seldom been so affordable.

“I suspect that some dealers are reticent to use finance in their marketing for two reasons. One is their concern about the new advertising regulations within the Consumer Credit Act. The other is that direct lender rates may be lower than they can offer.”

Devine urges dealers to confront the challenge from direct lenders. “Dealers have highly competitive headline rates available to them,” he says. “Overlooking finance in the marketing mix will only help to drive customers to direct lenders and maybe to other dealers who do promote competitive finance.”