FLA reported that the number of cars acquired through finance obtained from dealerships in June fell by 6 percent compared with the same month of 2008. Credit and loans designated for new motor purchases were significantly lower in the first half of 2009 compared to the same period of time from last year.
The struggling car market had a direct impact on finance figures provided to businesses for new cars. These figures went down by more than a third compared with the same period in 2008.
FLA says the UK government should intervene with a long-term plan and financial stimulus if lenders are to access financing again when the economy recovers. Business confidence still suffers a great deal due to poor availability and high cost of credit.
“We have seen the smallest drop in motor finance since September 2008, but motor finance providers are still very concerned about the lack of well-priced funding on the wholesale markets. While most lenders are able to meet demand at the current reduced levels, if demand increases in the second half of the year the availability of credit for car buyers may become an issue”, said Geraldine Kilkelly, Head of Research and Chief Economist at the FLA.
“The Government needs to prepare for a sustainable recovery by ensuring that the car finance industry has the capacity to meet future demand”, concluded Kilkelly.
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