Consumer car finance volumes edge down 1% in January

Consumer car finance new business volumes fell by 1% in January 2026 compared with the same month a year earlier, according to new figures from the Finance & Leasing Association (FLA), signalling a subdued start to the year for the market.

Despite the slight decline in volumes, the total value of new business rose by 3% over the same period, suggesting higher average transaction sizes or a shift towards more expensive vehicles. Over the 12 months to January 2026, new business volumes increased by 2% compared with the previous year.

Performance across the market was uneven. The new car finance segment recorded strong growth, with both value and volumes rising by 13% year-on-year in January. On an annual basis, volumes in the new car market were 9% higher than in the same period in 2025.

In contrast, the used car finance market weakened. The value of new business fell by 2% in January, while volumes declined by 5% compared with a year earlier. Over the past 12 months, volumes in the used car segment were down 1%, indicating a more cautious consumer approach in this part of the market.

Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said the figures reflected a mixed picture.

“The consumer new car finance market made an encouraging start to 2026, carrying forward the momentum built at the end of last year. While the used car finance market began the year more slowly, annual new business volumes remained broadly stable, highlighting the sector’s underlying resilience.”

She noted that while the new car segment had carried momentum into the start of 2026, the broader outlook had become more challenging.

“The outlook has become more challenging. Rising tensions in the Middle East are pushing up global energy costs, and inflation is now expected to increase rather than ease, delaying any move towards lower interest rates and placing renewed pressure on household budgets. 

“If these cost pressures persist, consumers are likely to become more cautious, leading to softer demand and greater sensitivity to affordability. As conditions tighten, FLA members will continue to support households navigate a more difficult economic environment through the provision of responsibly provided finance.”

The latest data suggests that while the market retains some underlying resilience – particularly in new car finance – growing economic uncertainty may limit further growth in the months ahead.

Table 1: Cars bought on finance by consumers through the point of sale New business Jan 2026 %  change on prev. year 3 months to Jan 2026 % change on prev. year 12 months to Jan 2026 % change on prev. year New cars             Value of advances (£m) 1,348 13 4,228 11 19,428 10 Number of cars 47,590 13 148,803 14 683,460 9 Used cars             Value of advances (£m) 1,928 -2 4,888 1 21,797 3 Number of cars 123,452 -5 313,222 -2 1,400,060 -1 Total cars             Value of advances (£m) 3,276 3 9,116 5 41,225 6 Number of cars 171,042 -1 462,025 3 2,083,520 2               Table 2: Cars bought on finance by businesses New business Jan 2026 %  change on prev. year 3 months to Jan 2026 % change on prev. year 12 months to Jan 2026 % change on prev. year New cars             Number of cars 24,357 -5 82,722 -2 348,282 -1 Used cars             Number of cars 4,869 19 14,088 22 53,012 -4