Slump in POS car finance

A new study has shown a slump in point of sale (POS) car finance for new and used cars over the last decade.

The study, which was carried out by Professor Peter Cooke from the University of Buckingham, showed that POS car finance from dealers was widely considered to be uncompetitive.

The results of the study show that from 1997 to 2006 franchised dealers' new private car finance penetration fell to 41 per cent from 52 per cent, while used car finance penetration fell to 30 per cent from 53 per cent.

Independent dealers' used car finance penetration experienced a fall to 20%, down from 40% in the same period.

Cooke said: "Franchised and non-franchised dealers may run the risk of losing car sales, particularly in a period of tight credit, if they do not promote PoS finance to private car buyers."

The total amount of car finance for new vehicles was between £5.7 and £7.1bn a year. Car finance for used vehicles was between £4.3 and £6.3bn a year. The report said other financial instutions had won business from dealers by actively promoting their products.

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