Scrutinising the annual survey results for Vehicle Finance

I’ve written before, and I certainly wasn’t the first to point out, that you can make statistics add up to show whatever you want to show.

I’ve written before, and I certainly wasn’t the first to point out, that you can make statistics add up to show whatever you want to show. Arthur James Balfour beat me to the “lies, damned lies and statistics” comment by more than one hundred and twenty years, and like pretty much all quotes, this one’s misattributed to Mark Twain.

Having said all that, over a year in which the membership of the Association wrote almost 30% more business than the previous year, I have people asking me to interpret the mountain of statistical data that emerges from our 1600 brokers. That 30% figure includes growth across nearly all sectors, so it is very easy to use the data to paint a sunny picture of commercial finance.

 If you wanted an indication that not everything was rosy, you could point to the slight decline in the field of Vehicle Finance. Let’s take a look at why that might have been the case.

It’s helpful to view the last three years in a row to check the longer-term progress of the market:

 2014               2015               2016

Number of deals average             192                 266                 196

Average deal value, rounded     £22k               £16k               £26k

Total business written                       £834m           £1.24bn         £1.06m

The first thing to say about the three year comparisons is that if this is a decline, it is clearly not a long term or consistent decline. Compared to the 2014 figures, our members are now doing more deals, at a higher average value, which all adds up to a leap in total business written (up by 27%).

Instead of asking why there is a decline in 2016’s figures, perhaps we should be asking instead what might have been responsible for a blip in 2015. And one possible answer to that question is the way Europeans pushed more of their cars to sell in the UK because the UK was at the time managing a stronger economic recovery.

For my second point, I turn to figures published by the Society of Motor Manufacturers and Traders (SMMT). They show that while new car sales grew in the first half of 2016 (up 3.2% compared to the same period in 2015), they had been growing faster before (2015 was up 7% on 2014). So, on its own, the pace of growth was no longer enough to mask other factors.

Thirdly and finally, these factors don’t just include pre-Referendum jitters that discouraged immediate starts on long-term plans, they also reflect subtle shifts in the make-up of our Association, such as when a specific lender encourages its full panel of brokers to sign up. You can also see from our own published data that we had 277 broker firms writing vehicle finance business in 2014-15. The number fell to by 18.4% to 226 in 2015-16, and I suspect that simply represents the vagaries of a shifting membership base.