Dealers should be heartened by a number of positive influences on the motor retail sector in 2010, said Finance & Leasing Association head of motor finance Paul Harrison. But he warned there will also be challenges.

“Base rates are expected to remain low next year,” said Harrison. “This will ensure motor finance remains attractive for private and business buyers. Dealers should also benefit from well-priced stocking finance.”

He said the FLA’s specialist automotive finance (SAF) programme would help address consumer misconceptions. “Many large retail groups are now SAF Approved and there is real momentum building behind our initiative to raise consumer confidence in finance sold in showrooms,” said Harrison.

“We aim to have the top 20 retailers participating in SAF by the end of 2010.”

Funding costs remain a major concern and Harrison sees this as a continuing challenge next year.

“Many motor finance providers continue to face severe wholesale funding problems, with the cost of funds from banks and other sources remaining high,” he said.

“We have called on the Government to help free-up liquidity in the markets to help motor finance providers continue to lend to car buyers.”

Next year will bring a regulatory hurdle for the motor finance sector with the implementation by June of the EU Consumer Credit Directive (CCD).

Harrison said: “The industry does not expect to see the final regulations until as late as March. The Conservatives, if elected, will have a new regulatory programme for the financial services sector.

"We are already in close contact with the Shadow Cabinet to ensure that any changes are proportionate and maintain a competitive financial services market for consumers and lenders.”