Forecourt finance is the most popular way to buy a new car, according to new figures from the Finance & Leasing Association, the trade body representing motor finance providers.
In the last 12 months, more than 54% of consumers chose finance from their car dealer. This is 1.6 percentage points up on February’s figure.
The finance sales figures for March are better than expected, despite volumes being 5% down compared with March 2010.
The latest figures should be viewed against strong finance volumes in March 2010, which were up 40% on March 2009 and boosted in part by the scrappage scheme.
Finance sales fell in the consumer used car market in March 2011, but in the first quarter of 2011 were 3% higher than the same period in 2010 in both values and volumes.
Business new car finance volumes fell 8% in March, and 5% in the first quarter of the year, compared to the same period in 2010. This illustrates that business confidence remains fragile, and many firms are seeking to extend agreement terms rather than invest in new vehicles. However, business demand for motor finance is not as closely linked to the number plate changes as private purchases.
Paul Harrison, FLA head of motor finance, said: “It was a mixed month for dealers – the proportion of cars sold and the value of loans rose once again, although the actual number of vehicles sold on finance fell.
“But with consumer’s budgets continuing to be squeezed, the growth in the value of finance was unexpected and March’s figures have been welcomed by motor finance providers.
“Dealer finance is once again the finance option of choice. However, customer retention is vitally important in tough economic conditions. Flexible finance agreements – such as personal contract purchase – are helping customer affordability and initiatives such as the FLA’s Specialist Automotive Finance are delivering improved financial information in showrooms."