The consumer car finance market saw a fall in new business volumes of 10 per cent in August, compared with the same month last year.
This was mostly impacted by the semiconductor chip shortage that continues to affect new vehicle production, leading to supply issues.
As a result, new car finance was down 13 per cent by value and 18 per cent by volume in August, according to the figures released by the Finance and Leasing Association (FLA).
Year-to-date figures show volumes are up 16 per cent on the same period in 2020, though this is compared with the height of the pandemic when dealerships were forced to close for months.
Although the used car market is seeing a boom with new car buyers turning to the second-hand market rather than wait months for a new vehicle, the used car finance market saw a drop in volume of seven per cent.
Commenting on the figures, Geraldine Kilkelly, director of research and chief economist at the FLA, said: “Supply issues in the new car market caused by the shortage of semiconductors continues to hamper the recovery of the automotive industry following the pandemic.
“New business volumes in the consumer new car finance market fell for a second consecutive month in August and the near-term outlook is likely to be weaker than previously expected.
“By contrast, the consumer used car finance market remains relatively strong, with annual new business by value in August only one per cent below its pre-pandemic peak.”
Figures from the Society of Motor Manufacturers and Traders shows that new car sales were down almost 35 per cent in September compared with the previous year. Year-to-date sales are up about six per cent, but this is expected to decline as the chip crisis continues to hurt supply.