Apex Insight has just released new research on the fast-growing car finance market has attracted a great deal of publicity and regulatory attention in the past year. The focus has been on the rapid growth of Personal Contract Purchase arrangements for new vehicles, but with car dealers selling four used cars for every one new, Apex Insight expects growing attention on the used car finance market.
The report: UK Used Car Finance: Market Insight Report 2018/9 quantifies its size, includes an in-depth analysis on drivers of growth and sets out our market forecast to 2021, based on our analysis and modeling of market drivers, trends in regulation and lender strategies.
The report finds that the market has doubled in value in the past six years, reflecting a shift from unsecured loans to secured car finance sold at point of sale by car dealers and higher used car prices. An important factor has been the increase in penetration amongst lenders, which has – in part – followed consolidation of the sector. As the chart shows, the market has historically been driven by increased used car sales but future growth will rely more on further growth in penetration and increases in average loan values.
Sub-prime lending is small and tighter regulation has limited its growth. The fastest-growing part of the market is for loans to non-prime customers (those with limited credit history or minor issues). Growth rates in non-prime are over 30% per year with several new entrants in recent years backed by investor capital, filling gaps left by bank-owned lenders that are focusing on more creditworthy customers.
The report, which includes profiles of the top 25 lenders, forecasts used vehicle finance to continue to grow in value despite near-flat used vehicle sales, reflecting increasing trends in finance penetration and average value of financed cars.
The 2018/9 UK Used Car Finance market report is available now. It is one in a series of Apex Insight Consumer Credit market reports, covering markets including Point of Sale Finance, Car Finance, Pawnbroking, Debt Purchase / Collection, Rent to Own Retail and Home Credit.
About Apex Insight
Apex Insight is an independent provider of research and consulting services covering business and financial services markets in the UK and Europe. It publishes insightful market reports and carries out commercial due diligence and other bespoke consulting exercises to support managers, investors and advisers in making better business decisions.
