New asset finance business declines in June

Total asset finance new business, primarily leasing and hire purchase, fell by 7% year-on-year in June, according to new figures from the Finance and Leasing Association (FLA).

However, in the first half of 2024, new business was 5% higher than in the same period last year.

The business new car finance and commercial vehicle finance sectors reported falls in new business in June of 11% and 12% respectively, compared with the same month in 2023. 

New business in the plant and machinery finance and business equipment finance sectors, meanwhile, fell by 12% and 23% respectively.

Geraldine Kilkelly, director of research and chief economist at the FLA, said: “Several factors contributed to the reduction in asset finance new business in June, including companies delaying investment plans until after the General Election and in anticipation of a cut in bank rate, as well as slightly fewer working days this June than in the same month in 2023.” 

The asset finance market reported new business growth of 9% in Q2 2024 as a whole, and a higher level of new business in the first half of the year, which was supported by continued growth in the vehicle finance sectors, offset in part by lower levels of new business in the machinery and equipment finance sectors.

Kilkelly continued: “Encouraging more private sector investment will be crucial to delivering higher economic growth.

“The asset finance industry plays a key role in helping businesses of all sizes to fund this investment with FLA members financing as much as 40% of all UK investment in vehicles machinery and equipment.”

Consumer car finance new business decline

As well as showing an 11% decline in consumer car finance new business in June, when compared to June 2023, the corresponding value of new business decreased by 10% over the same period.

In the first half of 2024, new business was 3% lower by both value and volume compared with the same period in 2023.

The consumer new car finance market reported new business by value in June 6% lower than in the same month in 2023.

In the first half of 2024, new business volumes in this market were 7% lower than in the same period in 2023.

The consumer used car finance market, meanwhile reported a fall in the value of new business in June of 13% compared with the same month in 2023, while new business volumes fell by 10%.

In the first half of 2024, new business volumes in this market were 1% lower than in the same period in 2023.

Kilkelly said: “The fall in the consumer new car finance market reflects trends in private new car sales and the shift by consumers to using salary sacrifice schemes to finance new battery electric vehicle purchases. 

“Our latest research suggests that the value of new business in the consumer car finance market will fall by 1% in 2024 to £38.5 billion, reflecting growth of 1% in the consumer new car finance market to £17.1bn and a 3% fall in the consumer used car finance market to £21.4bn.

“As always, customers who are worried about meeting payments should speak to their lender as soon as possible to find a solution.”