Car finance specialist reports growth acceleration

Car finance specialist S&U has said that demand is healthy and transactions are ahead of last year despite the new car market downturn.

The Solihull-based listed lender issued a trading update for the period between May 23 and July 31, ahead of its half year results in September.

It said its Advantage Finance division and property bridging company, Aspen, continued to trade well and in line with expectations.

Advantage Finance saw the pace of growth in both applications and transactions “continue to accelerate.”  It now receives over 110,000 applications a month and new transactions are ahead of last year.  Customer numbers now stand at a record 62,000, up 7% on last year.

Following the reported tightening of underwriting last year, collections for the half year are up by 7% on the same period last year, and early repayment indicators on new business continue to show improvement.

S&U added: “In contrast with the current low levels of consumer confidence in the UK, demand for Advantage’s motor finance is healthy and transactions are ahead of last year.  Indeed, despite a recent downturn in the new car market, the used car market remains robust and is likely to continue to do so, even assuming a “no-deal” Brexit.”

Aspen depends principally on values and activity within the housing market.  S&U said: “Whilst the former has been firm, the latter has slowed, partly due to uncertainty around Brexit and around Government stability.  Aspen therefore continues to gradually build its bridging book and net amounts receivable at half year stand at over £24m (2018: £16.3m).”

At the period end Group borrowing stood at just over £125m, within its medium-term facilities of £160m.

Anthony Coombs, S&U chairman, said: ” Trading in the first half of the year reflects continued and consistent growth in profitability which has been the S&U hallmark over the past 10 years.  Transaction volumes and quality improvement, particularly in our motor finance business, are expected to be reflected in the pace of profits growth over the full year.”