New car finance slows in May

The slowdown in new motor finance continued into May, prompting fresh calls for greater government support for dealer finance.

Consumers bought 32 per cent fewer new cars with dealer finance through car showrooms in April 2009 compared with April 2008.

Sales down 28 per cent

In the first four months of 2009, the volume of sales was down 28 per cent compared to 2008.

Geraldine Kilkelly, head of research and chief economist at the FLA, said:

“The downturn in the motor finance market continues. There remains an urgent need for Government support in the wholesale finance markets in which motor finance companies raise the funds they need to lend to customers.

“Otherwise we risk a widening gap between supply and consumer demand.”

The FLA submitted evidence to the Business and Enterprise Committee in May, urging the department of Business, Enterprise and Regulatory Reform (BERR), the Bank of England and HM Treasury to expend their lending support to independent non-bank lenders and the lending subsidiaries of manufacturers.

Scrappage scheme welcome

It said in May that while it welcomed the government vehicle scrappage scheme, if it was successful in stimulating demand, it will add to the growing gap between demand and the supply of finance.

It added that while the European Investment Bank had announced its automotive support package, the loans were for energy efficient production and this id not provide the short term cash injection that was necessary.

Sourced via motortrader.com