The number of new cars bought by consumers using dealer finance in 2011 was up by one per cent to almost 517,500, or 62.9 per cent of the total, according to statistics from the Finance and Leasing Association.
Dealer finance also helped consumers to purchase almost 729,000 used cars, four per cent more than in 2010. Overall last year, consumers purchased almost 1.25 million cars using finance provided through dealerships.
The total percentage of consumer car finance provided through PCP (personal contract purchase) contracts grew in 2011 to 61.1 per cent, compared with 58.7 per cent in 2010.
By contrast, hire purchase fell from 34 per cent of the market in 2010 to 30.4 per cent in 2011. Consumer car leasing accounted for 6.5 per cent of the market, and continues to grow year-on-year.
Business car finance volumes fell by two per cent in 2011 compared with 2010, although the final quarter of 2011 saw growth of six per cent in the business new car finance market compared with Q4 2010.
Paul Harrison, head of motor finance at the FLA, the trade body for the motor finance industry, said: ‘Despite some of the gloomy headlines on retail confidence, in 2011 growth in the car finance market was driven by consumers. Value-for-money offers and flexible finance deals attracted customers to showrooms.
A cautious approach
‘Consumers are looking for finance that suits their budget, and the importance of affordability is shown by the numbers of consumers turning to leasing or personal contract purchase.’
Overall, new consumer credit spending in 2011 remained at 2010 levels, said the FLA, with people still being cautious about splashing out.
Spending using store cards, store instalment credit, personal loans and credit cards all fell in 2011 compared with 2010.
Fiona Hoyle, the FLA’s head of consumer finance, said: ‘Consumers continue to take a cautious approach in uncertain economic times.’