The Finance and Leasing Association (FLA) has suggested that consumer confidence “should improve” in the automotive retail sector as uncertainty about the UK's economic outlook reduces in 2020.
Despite the impending January 31 Brexit deadline, which is set to trigger a 12-month race for the UK Government to negotiate a trade deal with the EU, Geraldine Kilkelly, head of research and chief economist at the FLA, suggested that the car buying intention of motorists looked set to improve.
Her comments came as the FLA’s latest market data showed that new business volumes in the consumer car finance market fell 4% by volume and 3% by value year-on-year in October.
Kilkelly said: “The consumer car finance market is on track to report new business volumes in 2019 as a whole of around 2.4 million cars, a similar level to 2018.
“Consumer confidence should improve as uncertainty about the economic outlook reduces, which will help support demand for car finance next year.
“New business volumes in the consumer car finance market are likely to remain stable in 2020 as a whole, with a modest fall in new business volumes in the new car finance market offset by single-digit growth in the used car finance market.”
Within the overall figures, the FLA reported that the new car finance market saw new business volumes 9% lower (at 65,854) year-on-year in October as the value of advances declined 5% (to £1.4 billion).
Despite this fall, the percentage of private new car sales financed by FLA members reached a record 91.3% in the twelve months to October 2019.
Used car business declined 2% to 127,990 vehicles, meanwhile, as the overall value of advances declined by 1% (to £1.58bn).
The figures are roughly in-line with Society of Motor Manufacturers and Traders (SMMT) new car registrations data for October, which showed a volume decline of 2.9% for the month.
Last month, before the Conservative Party's victory in the 2019 General Election, Cox Automotive predicted a 1.3% year-on-year decline in new car sales and 2.7% decline in used car sales volumes in Q1 2020.
Philip Nothard, customer insight and strategy director for Cox Automotive UK, made the forecast as he re-stated the automotive remarketing and stock funding giant’s “extremely accurate” prediction of a 2.1% decline in overall vehicle sales transactions in 2019.
Nothard said that used car transactions will top 10 million for fifth year in a row by the end of next month, before issuing a new prediction that car retailers will sell 2.65 million new and used cars in the first three months’ trading of next year.