The Finance and Leasing Association has released information regarding dealer finance, showing that a contracting dealer vehicle finance market slowed during July. The slight improvement may be down to increased competition in the motor finance sector, and not down to the influence of the scrappage scheme . This contradicts earlier news stories that indicated scrappage was having a positive influence on dealer car finance levels.

Lenders are reportedly competing to offer credit deals in car showrooms, although it should be noted that good credit customers are the only consumers likely to benefit. The number of both used and new cars bought with dealer finance has fallen considerably this year.

Geraldine Kikelly, the chief economist at the FLA, reportedly commented: The slight improvement in motor finance volumes in July may in part reflect the impact of the car scrappage scheme. But there is no evidence that scrappage accounted for more than a small number of finance deals on mostly smaller cars . Motor finance companies still need a long-term and sustainable market for affordable wholesale funds. Otherwise, with or without the scrappage scheme incentive, it will be difficult for the industry to continue to offer good motor finance deals in response to rising demand.