Leasing with option to buy accounted for 75% of the financing of new cars in France in 2017
14 February 2018
14 February 2018
The French Association of Financial Corporations (ASF) has confirmed the good health of the automotive finance sector in 2017, especially highlighting the popularity of leasing with the option to buy.
Underpinned by 4.7% growth in new car registrations in France, which exceeded 2.1 million units in 2017 again for the first time since 2011, new car financing increased by 13.7% to over €8.9 billion according to the ASF (ASF members account for nearly 50% of the total outstanding of all credit institutions).
Leasing with the option to buy especially drove this dynamic growth, surging by 26.2% to more than €6.56 billion. In this context, the ASF has revealed that the share of leasing with the option to buy of the total financing of new cars purchased by private consumers has increased from 42% in 2013 to 74% in 2017. This sharp increase was achieved at the expense of conventional credit, which amounted to €2.34 billion in 2017 compared to €2.62 billion in 2016, equating to a decline of nearly 11%.
However, conventional credit remains a popular option for buyers of used cars. The ASF reports that this type of financing amounted to €3.54 billion in 2017 compared to €3.28 billion in 2016, an increase of 7.9%. To put this into context, the French carmakers association CCFA reports that used car sales in France increased by just 0.6% in 2017, rising to 5.68 million units from 5.54 million in 2016. Consequently, the ratio of used car sales to new fell for the third consecutive year from a recent high of 3:1 in 2014 to 2.7:1 in 2017.
Overall, financing for both new and used cars increased by 12% to €12.44 billion in France in 2017 and the leasing of new cars with the option to buy now accounts for more than half of this amount. Growth in financing is therefore outpacing both the new and used car markets and accurate residual values are proving increasingly critical for setting both used car prices as well as leasing and credit repayment rates.