5 Facts About the UK Car Finance Market
It’s easy to assume that the UK car finance market has been significantly affected by the COVID pandemic over the past couple of years and it’s going to take a while for it to recover. However, 2021 proved to be a good year for the car finance market as it saw a 9% rise compared to the previous year and 2.1 million cars were financed. But comparing that to 2019, before the pandemic, it’s still down by 14%. Nevertheless, this is good news for the UK market as a whole because it’s a sign of healthy recovery.
Overcoming Current Challenges
As with other industries, the car finance market is expected to still face many obstacles. Even with the market rebounding in 2022, there is still some economic uncertainty around, brought about by potential new waves and new COVID variants.
The economy is still recovering and many households continue to face a tight squeeze when it comes to their disposable incomes. Taxes, interest rates, and higher inflation and fuel costs are amongst the challenges that many UK families are trying to overcome.
Expected Business Growth
Whilst supply in the car market proved to be a problem previously, it’s now slowly easing . Business investments are also expected to continue recovering as 2022 progresses. According to the Finance and Leasing Association (FLA), over 90% of car finance providers are expecting new business growth in the next 12 months.
Car finance companies are investing heavily in marketing and advertising to boost the growth of their businesses. It benefits the advertising and marketing industries too, driving further growth for the UK economy as a whole.
Buyers Prefer Used Cars
More and more car buyers are looking into the secondhand car market for their next vehicles. Many find it more attractive and more practical since it costs less than a brand new car and it is readily available for the buyer to drive home. In buying a brand new vehicle, it’s possible that the buyer might have to wait for a few weeks or months for their preferred model to arrive.
This demand for used cars is helping the automotive industry after the effects of two years of the COVID pandemic limiting many businesses and industries and the mobility of people in general.
In 2021, there was an 11.5% growth in secondhand car transactions despite the market having been volatile. The growth is still below the numbers of the pre-pandemic years but industry experts are hopeful.
More UK Motorists Plan to Buy Cars
About 49% of motorists in the UK are planning to buy a car this year, which is great news for the brand new and secondhand car markets. The pandemic has made cars the preferred means of transport in the UK, with customers being mainly males aged 25 to 34 years.
The demand for vehicles has been strong last year and it is predicted that this trend will continue throughout 2022. However, since the car market has been experiencing manufacturing delays, especially with the shortage of semi-conductors globally, it is recommended that car buyers be ready to shop around or patiently wait for their preferred vehicles.
Car Leasing is Also Growing
The shortages and disruptions in deliveries in the car manufacturing industry are among the challenges that troubled many car businesses. They’re expected to improve within the first quarter of 2022. Personal new car leasing has been growing in 2021 and many are hopeful that it will continue to get stronger as the year progresses.
From November 2020 to November 2021, there was a 28% increase in the car leasing sector according to the FLA, with a total value of £2.33 billion. Experts state that this figure will continue to rise up until the end of 2022. So, even if 2021 had been a tough year for the car industry, it’s now bouncing back and consumers are more willing to spend this year.