The UK finance market has been resilient in the face of historic changes in the past year, but challenges will remain in 2017 and beyond, a new report reveals.
The UK Asset and Auto Finance Survey 2017 from White Clarke Group, produced in conjunction with Asset Finance International, points to a series of key factors that will have the greatest impact on the market. Six key factors affecting UK auto and asset finance markets in 2017:
- Vehicle sales outlook (new and used)
- Residual values
- Growing demand for PCH
- New technology and innovation
- P2P lending
Among the key issues raised by expert contributors in the report is the UK’s vote to leave the European Union. The process started on March 29th with the triggering of Article 50, meaning that ‘Brexit’ will be completed by early 2019 after two years of negotiations.
Although the economic chaos predicted before the vote never arrived, there are still potential threats to the current trend of strong business growth, including the falling value of sterling, and rising inflation that could chip away at the confidence of consumers and businesses when it comes to acquiring new assets.
A second factor broadly identified by many contributors in the report is new government legislation, including the role of the Financial Conduct Authority, concerns that the Consumer Credit Act is outdated, amendments to accounting standards and the impact of car tax changes, including road tax and salary sacrifice agreements.
Furthermore, environmentally-focused legislation, from low-emission zones to bans on certain vehicles is set to have an impact on buying patterns, contributors suggest.
New and used car sales will also play a central role in the finance industry’s fortunes over the next year, with alternative fuels playing a major role too, according to Chris Bosworth, director of strategy at Close Brothers Motor Finance.
He said: “Continuing innovations in technology – be it safety improvements, autonomous driving technology or alternative fuel (AFVs) vehicles – are crucial in driving consumer interest in new cars.
“Last year alone there was a 22% increase in sales of AFVs – if this trend continues and consumer interest in this technology continues to rise, AFVs could well be the answer to one of the keys in encouraging new car purchases over used vehicles in 2017.”
At the same time, innovation brings potential threats from disruption, particularly in the changing nature of funding provision.
This includes the growth of peer-to-peer business lending, which exceeds £1 billion annually. This is only a small part of the market, with bank loans accounting for £54 billion of small business lending, but it’s an important trend to watch.
To find out more download a complimentary copy of the White Clarke Group's UK Asset and Auto Finance Survey 2017 by completing the form below.