Decline in new asset financing segment in June

The total value of new asset finance transactions, mainly leasing and hire purchase, fell by 7% year-on-year in June, according to the latest data from the Finance and Leasing Association (FLA).

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

The new car finance and commercial vehicle finance sectors saw new transactions fall by 11% and 12% respectively in June compared to the same month in 2023.

Meanwhile, the number of new orders in the machinery and equipment financing and corporate equipment financing sectors fell by 12% and 23%, respectively.

Geraldine Kilkelly, research director and chief economist at the FLA, said: “A number of factors contributed to the reduction in new asset finance activity in June, including firms deferring investment plans until after the general election and anticipating an interest rate cut, and slightly fewer working days in June than in the same month in 2023.”

The asset finance market saw new business growth of 9% in the full second quarter of 2024 and higher new business in the first half of the year, driven by continued growth in the vehicle finance sectors, partially offset by lower new business in the machinery and equipment finance sectors.

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

“The asset finance industry plays a key role in helping businesses of all sizes to finance this investment, with FLA members funding up to 40% of all UK investment in vehicles, plant and equipment.”

	June 2024	% change from previous year	3 months to June 2024	% change from previous year	12 months to June 2024	% change from previous year
Total FLA Asset Funding (£m)	3,276	-7	10 456	9	39 437	7
Total excluding high value (£m)	3,076	-10	9,792	7	37 532	7
By assets
Financing of machinery and equipment (£m)	615	-12	1,994	0	7364	-11
Commercial Vehicle Finance (£m)	837	-12	2,757	13	10 343	8
IT Equipment Financing (£m)	110	8	354	42	1,248	-6
Business Equipment Financing (£m)	136	-23	413	-11	1,772	-7
Car finance (£m)	1,130	-8	3,506	9	13 789	20
Aircraft, Ship and Rolling Stock Financing (£m)	43	-5	114	23	348	8
By channel
Direct funding (£m)	1,337	-15	4,353	5	17 144	9
Broker Funding (£m)	726	-3	2,282	9	8,420	2
Sales financing (£m)	1,008	-8	3,157	10	11 963	8
By product
Finance Lease (£m)	306	-11	812	1	3,413	-1
Operating Lease (£m)	854	1	2,657	21	9981	25
Leasing/Hire Purchase (£m)	1,694	-12	5,436	4	20 431	1
Other finances (£m)	266	-10	1,160	20	4,246	13

Decline in new passenger car financing transactions

In addition to the 11% decline in new passenger car finance transactions in June compared to June 2023, the corresponding value of new transactions fell by 10% over the same period.

In the first half of 2024, new orders fell by 3% in both value and volume compared to the same period in 2023.

The market for financing new cars for individual customers recorded a value of new transactions 6% lower in June than in the same month of 2023.

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

Meanwhile, the used car financing market for individual customers saw the value of new contracts fall by 13% in June compared to the same month in 2023, while the volume of new contracts fell by 10%.

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

Kilkelly said: “The decline in the consumer new car finance market reflects trends in private new car sales and a change in consumer attitudes towards using salary discount schemes to finance the purchase of new battery electric vehicles.

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

“As always, customers who have concerns about meeting their debt obligations on time should contact their lender as soon as possible to find a solution.”