Eighty-six per cent of dealers say that having to sell older cars creates “specific problems” – with vehicle history, preparation and breakdowns heading the list, dealer research in August’s Startline Used Car Tracker shows.

The research shows that 58% say stock shortages and high values mean they are selling older cars than three years ago. This ranges from 52% of dealers retailing stock that is around one year older than previously to 34% retailing 1-2 years older, to 14% retailing more than two years older.

As a result, 32% say that vehicle history has become more important, 24% that more preparation is needed for sale, 13% that breakdowns or warranty claims are more common and 11% that customers require more convincing to buy.

Paul Burgess, CEO at Startline Motor Finance, said: “We can see from our own lending profiles that the average used car purchase is getting older."

Consulting firms Capita and Finativ have co-authored a whitepaper highlighting the need for disruption in the motor finance industry similar to the revolution in electric vehicle space.

The paper outlines the gap between the vehicles customers are buying and how they pay for them.

It says the motor finance industry’s fundamentals are still in the age of the internal combustion engine.

The authors of the report cautioned that if motor finance providers do not embrace the latest trends and offer flexibility, they will be left behind peers that do.

Traditional motor finance providers could lose their market share if they fail to adopt a model of private car ownership that includes the vehicle, insurance and electric/fuel.

Although lenders have the technology and resources to provide services via the “pay-per-drive” model, the fear of alienating traditional dealer and franchise relationships has kept many financial institutions from applying this to motor finance and leasing sectors.

In June 2022, the UK new car finance market recorded its ‘largest contraction’ in new business volumes since February 2021 as market recovery remained disrupted due to vehicle shortages.

Data released by trade body Finance & Leasing Association (FLA) shows that new business volumes for new and used cars slumped 12% year on year to 189,182 units in June 2022.

The consumer new car finance market fell 21% by value to £1.43bn and 28% by volume to 56,877 YoY.

While the consumer used car finance was up 10% by value to £2.05bn, it was 3% lower by volume in comparison with June 2021.

In the first half of 2022, new business volumes in this market were 12% higher than in the same period of 2021.

“Our Q3 2022 industry outlook survey suggests 56% of motor finance respondents expect growth in new business over the next year, down from 76% in the Q2 2022 survey,” the FLA said.

Despite soaring consumer interest in EVs, over half of retailers (51.6%) recently surveyed by Auto Trader reveal they feel unprepared and not strategically ready to respond to this surging demand. Unsurprisingly, franchise retailers are far more confident with only a fifth (20%) saying they feel unprepared compared to nearly 60% (59.9%) of independent retailers.

The data features in Auto Trader’s recently released Road to 2030 report, that shows half of retailers (50.4%) surveyed have never sold an EV. Franchise retailers are significantly further down the electric road with only 14.3% of franchise retailers having never sold an EV compared to nearly 60% (59.6%) of independent retailers.

As reported by the SMMT, sales of new EVs in the first half of 2022 grew 56% on the previous year, and now account for around one in seven of all new car sales in the UK, highlighting a mismatch between retailer readiness and consumer interest.

The Competition and Markets Authority (CMA) has formally clarified the legal status of rental and leasing firms in the vehicle supply chain as ‘end user’ post-Brexit.

The new legal status was confirmed in the Vertical Agreements Block Exemption Order (VABEO) guidance for those operating at various levels of the supply chain.

Following UK’s exit from the European Union, the ‘end users’ status remained unconfirmed.

The regulator’s new guidance also confirmed that the rental and lease agreements will continue to be exempt from block exemption regulations.

Additionally, the CMA has added provisions concerning the exchange of information in certain settings of the supply chain.

Furthermore, the regulator has clarified the role of brokers as online intermediation service providers (OISPs) in the distribution chain, and dual-role agents.

UK trade body BVRLA stated that the formal confirmation comes after inputs from the association.