The Finance and Leasing Affiliation (FLA) has warned that inflation may peak at 8% within the first half of 2022 after the worldwide financial outlook weakened following Russia’s invasion of Ukraine.
Automobile finance enterprise volumes rose 43% year-on-year in January, in keeping with the FLA’s newest knowledge, however this got here in comparison to a period impacted by dealership closures ensuing from authorities’s COVID-19 mitigation measures.
And whereas some stage of restoration remained on the playing cards, Geraldine Kilkelly, the FLA’s director of analysis and chief economist, urged rising strain on customers’ disposable earnings is ready to stymie the sector’s progress.
“The sturdy efficiency of the patron automobile finance market in January partly displays the closure of showrooms through the third UK lockdown final 12 months and the continued record-high development in used automobile costs,” mentioned Kilkelly.
“Annual new enterprise by worth reported by the patron automobile finance market was just one% decrease in January than its pre-pandemic stage.”
She added: “The financial outlook within the UK and globally has weakened following the invasion of Ukraine, with shopper value inflation within the UK anticipated to peak at greater than 8% within the first half of this 12 months.
“However, we proceed to count on additional development available in the market throughout 2022 as demand for finance for electrical autos and used vehicles stays sturdy.”
The FLA’s knowledge for January confirmed that the patron automobile finance market reported new enterprise volumes up 43% to 176,018 items.
The corresponding worth of latest enterprise elevated by 60% over the identical interval, rising to £3.19 billion, it mentioned.
Within the twelve months to January 2022, new enterprise volumes grew by 15% in contrast with the identical interval in 2021.
FLA knowledge confirmed that the patron new automobile finance market delivered new enterprise up 52% by worth (to £1.31bn) and 47% by quantity (to 53,788) year-on-year in January.
The buyer used automobile finance market reported new enterprise up 66% by worth (to £1.89bn) and 41% by quantity (to 122,230) in the identical interval.
Within the twelve months to January 2022, new enterprise volumes on this market have been 17% increased than in the identical interval in 2021, the FLA mentioned.