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November 23, 2011updated 12 Apr 2017 4:10pm

Northern lights

There has been mixed messages from Nordic countries in the first half of the year, where, apart from Sweden, new business has increased The Nordic countries have enjoyed strong car leasing sectors, and the move of domestic car manufacturers to Asia has changed the trends in that market

By Elza Holmstedt-Pell

Photograph of Northern Lights

There has been mixed messages from Nordic countries in the first half of the year, where, apart from Sweden, new business has increased. Elza Holmstedt-Pell takes a closer look at the different trends taking place in the region.


Bar chart showing new business dataThe Nordic countries have enjoyed strong car leasing sectors, and the move of domestic car manufacturers to Asia has changed the trends in that market. Conservatism and caution can be associated with the Nordic economies and, in the current financial state, careful investors are challenging the outlook for strong growth on the leasing market in the near future.

Fredrik Lindblom, partner at DLA Piper Norway, says that there is no “great positivity” in the Nordic leasing market at this time.

“I keep hearing that the industry’s pretty flat right now,” he says, explaining that the demand for financing has decreased over the past few months.

“Rainy days always come and quite periodically,” says Stefan Johnsson of SEB Leasing and Factoring.

He has noticed a slowdown in investments the past few months but says that the market is still relatively stable. The current downturn is, according to Johnsson, reflected in all other sectors too, and will not affect leasing long term.

“A positive thing is that people don’t want to own peripheral equipment when the budget is tight, and can lease them to focus on their core activities,” he says.

“It feels quite uncomfortable to speak about stability in the European market now,” says Fredrik Enhörning of Swedbank Finans, which has a market share of 12% in the business market and 7% in the consumer market.

“But,” he adds, “during normal circumstances, if they exist, and from a product perspective, I would say that the Swedish financing market is stronger than any other European market. However, the shifts will be bigger than on some markets. This is both because leasing is more prevalent in some markets and because leasing has a wider spread and higher credit risks.”


Different trends in the region

Enhörning also explains that the Nordic markets are, to some extent, quite different. For example, in Finland, big-ticket leasing is common and stands for much of the market, whereas in Norway, the penetration of leasing is bigger when it comes to the small and mid-ticket items.

Sweden has seen a great increase in IT leasing, which Denmark and Norway haven’t, but new leasing business there has dropped 1.9%. The drop represented a 22.6% fall in equipment leasing, whereas new business of vehicle leasing increased by 13.8%.

During the financial crisis, Denmark was hit worst among the Nordic countries and the value of leasing assets went down from DKK50.7bn (€6.8bn) to DKK43.1bn in 2010.

Christian Brandt, managing director of the Danish Association of Finance Houses, says: “We’re still not back to levels before the crisis, but we’re moving gently along the right track. Good car sales in 2010 and 2011 are particularly contributing positively.”

The car leasing numbers echo Brandt’s observation, with new business in the car leasing segment increasing 41% between 2009 and 2010.



Bar chart showing outstandingsPassenger car leasing has increased throughout the region – but to different extents and because of different reasons. When it comes to fleets, Lindblom from DLA Piper says the industry is quite flat and that even though some growth has been displayed, the growths are generated in a market that is relatively small among the Nordics.

New business written in the car leasing segment of Norwegian leasing increased 45% between 2009 and 2010, compared to a drop of 7% between 2008 and 2009.

The first nine months of this year are also positive, showing a 9% increase compared to the same period last year for passenger cars, and a 12% increase for car leasing in total.

“It is surprising that there has been such a big increase,” says Anne-Lise Lööfsgard, managing director at Norway’s Finance House.

Finnish car leasing went up 5.2% in terms of new business between 2009 and 2010, compared to a drop of 12% in new business in the rest of the leasing market.

Timo Ahonen, representative of Finland’s Finance House and SEB leasing in Finland, believes that this has to do with increased car sales and does not prove increased product penetration.

“That would require a tax change or some change like that,” he says.

He adds that they have seen a cultural change in people wanting to lease cars more over the past 15 years.

This change of tradition seems now to be taking place in Sweden, where operational leasing of cars is increasing every year in a market heavily dominated by financial leasing, especially customer leasing of between one and 10 cars.

Thomas Fransson at Autolease Sweden, who has been in the car leasing industry for more than 15 years, explains that car leasing in general is increasing by about 1% every year, but operational leasing of cars has increased by between 12% and 15% every year for the past 15 years, apart from this year, due, he says, to the worries about lease accounting.

The failure to keep Volvo and SAAB’s manufacturing in Sweden has led to the companies having less influence on the car leasing market, making operational leasing of cars increase.

“SAAB basically doesn’t exist and Volvo is Chinese, so I think it will increase even more,” says Fransson.

He explains that Norway, Finland and Denmark are all relatively big on operational car leasing, but Sweden has lagged behind because of domestic car manufacturers solely offering financial leasing and SMEs not realising the benefits of operational leasing.



“People at smaller companies seem to think ‘I’m going to do what I’ve always done, I only have so many cars anyway and I don’t think I can get great prices’,” says Fransson, who was part of the LeasePlan team that introduced Sweden to operational leasing in the mid-1990s.

Carsten Thorne, Société Générale Equipment Finance’s Scandinavian chief executive, comments that apart from car leasing there is a rather conservative approach to operational leasing throughout the Nordic countries.

He says that there is a question of supply and demand – customers have not shown great interest in operational leasing and lessors have adapted to that.

Out of Autolease’s roughly 300,000 B2B cars in Sweden, around 200,000 are financially leased, 80,000 are paid for with cash and the remaining 10,000 to 20,000 are operationally leased.

On the contrary, when it comes to its 120,000 fleet cars, 8,000 are financed by cash and, of the remaining 112,000, 55% are financially leased and 45% are operationally leased.

Fransson thinks customers at smaller companies will soon jump on board as well, but that it takes them a bit longer to abandon the old traditional approach.

Pull quote by Per-Eric Ericsson, ScaniaThe conservative approach of smaller companies to leasing as a way of financing their investments is something that has been noticed by Timo Ahonen too, in more sectors than car leasing. Despite the leasing environment in Finland being well-established, he would like to see a trend of smaller companies having better acceptance of leasing in the equipment sector.

Finland’s machinery and construction sector has dropped 2.4% in terms of new leasing contracts signed in 2010, and leasing as a whole has seen a decrease of 12.4% in new business throughout the year. Ahonen explains this as investors being careful, leading to figures dropping because of fewer big-ticket leasing deals.

He emphasises that leasing in Finland is still strong and stable, but that larger transactions in the market distort total figures. Nonetheless, he believes he will soon get to see the trend he wishes for, of smaller companies turning more to leasing as a method of financing rather than owning, especially in the equipment sector.

In Denmark, equipment leasing has taken a hit, dropping 15% in value between 2009 and 2010.

Christian Brandt, managing director of Denmark’s Finance House, says that agriculture especially has become a “tight” market and will probably remain in that condition for a while because of a tough market.

“The bad world economy leads to a poor outlook for Danish transport, which in turn leads to other segments of the leasing market being pulled in the wrong direction,” he says.



This year, the country has seen Finans Nord being sold by Spar Nord Bank, in order to help the bank increase liquidity and to reduce its government debt following a state guaranteed bond issued during the financial crisis.

Finans Nord was bought by rival bank Jyske Bank, who, from October this year, acquired its fleet business and took over the forward-looking activities of its Danish equipment leasing business. Brandt would not be surprised if another similar sell-off takes place.

He says: “It’s certainly not impossible, though it can happen in many different forms. We have already seen different types of consolidation in the industry, so I think we are over the worst.”

In Sweden, leasing for office and communication equipment are both down between 2009 and 2010, office equipment falling as much as 56% in terms of book value at the end of the year.

“People hold on to their equipment in these times, and wear it out before investing in something new,” says Lindblom.

However, leasing of graphical equipment is slightly up and, in contrast to Denmark, leasing agriculture and construction machines went up 18%.


Agriculture and trucks

Per-Eric Ericsson, regional head of Scania in Sweden and Denmark, says he has seen a rejuvenation in the agriculture and truck business in the past few years.

“The sector has been conservative, which is one of the reasons why businesses have wanted to own their equipment. But now we’re seeing more of an openness for leasing as a financial product,” he says.

He emphasises that the conservatism has applied to Scania as a supplier as well, but that they are working on increasing their leasing products.

“The share of leasing will increase in the near future. The challenge,” he says, “is to deal with an increasing leasing portfolio over time, in different types of financial markets, to avoid ending up with unsold vehicles for a long time, or taking on vehicles with the wrong value, in case one fails to estimate the correct residual value.”

The IT sector provides the most mixed perspectives from the Nordic region. In Sweden and Finland it’s a strong and growing market, whereas in Norway it sees little growth, and in Denmark new business in the IT sector has dropped by 13%.

Société Générale’s Thorne underlines technology and modernism as characteristics of the Nordic countries, and sees great potential for IT leasing in the region.

Table showing political and macro-economic data in the Nordic countries


Information technology

The percentage of internet users compared to the population as a whole is around 90% for all of the Nordics, compared to around 80% for countries such as France and Germany, and 50-65% in Italy and Spain. IT leasing increased by 112% in Sweden between 2009 and 2010, in terms of book value.

Enhörning, at Swedbank, explains that a reason behind the growth of IT leasing has been a type of staff package where employees have been able to lease or rent a computer from the company, paid for with a deduction of their gross salary. A similar concept is available for company cars. Anders Grönberg at Nordea Finans recognises IT leasing as one of the biggest potentials on the Swedish leasing market.

“The penetration on the market is really high,” he says.

In Finland, the IT sector makes up 23.6% of the leasing market and grew 2.3% in terms of new business in 2010. In Norway, IT equipment and office equipment are presented in the same category, and in the first nine months of this year, the sector has stagnated with a growth of 0.3% in terms of new business.

Denmark’s drop of 13% does not surprise Brandt: “Several leasing companies have pulled out of this market,” he says.

In all of the Nordic countries, bank-owned lessors are dominating the market. Ahonen says that independents are increasing slightly in the IT and car sector, and that what has made them increase are packages with “all kinds of extra value services around them”.

He says that he believes banks are more effective in distribution and more beneficial as they have more capital. But he doesn’t see a change being impossible; if there is an increase of independents globally it might happen in the Nordics as well.

Grönberg at Nordea Finans Sweden says that in niche sectors such as car leasing, captives such as Scania and Volvo compete with them, but apart from this sector, banks are dominant, and he believes that trend will remain.

Johnsson at SEB explains that even though there might be less competition, the big banks have more capital, which contrasts with the situation in other countries, where there are more actors but less resources in general. He believes this is part of the Nordic “conservatism” and that customers prefer to look for financing from their own banks rather than an independent financier.

Fredrik Lindblom, a partner at DLA Piper in Norway, explains that the difference in Norway is that the firms that dominate the leasing market are not only national or regional, but among the biggest players globally, such as Société Générale, Santander and GE Capital.

In Sweden, ‘the big four’ – Swedbank, SEB, Handelsbanken and Nordea – dominate the market, and the Finnish and Danish markets look similar.

Andrew Denton, chief operating officer of CHP Consulting, which provides leasing software solutions for several of the region’s major players, is enthusiastic about the Nordic market. From a standing start in 2008, CHP has seen business grow in the region to the extent that the Nordics is one of the company’s most significant markets.

“It is an incredibly strong market; it is a growing market for us and an innovative market and a perfect place for us to be and one we have great affection for,” says Denton.

He says the approach to business in the region is pragmatic and a lack of parochialism makes it a good market to sell in to. He predicts, both for CHP and its clients, stability is in store for the Nordics.

“The Nordics have very stable economies and are some of the most admired economies in world,” says Denton. “Economic stability and the fact the banks are incredibly well run means, from a leasing perspective, a very bright future for the Nordic market.”



Société Générale’s Thorne says that he believes there has been consolidation in all markets now, and that the demand of leasing in the region is high. He believes that the balance between industry, high-tech and transport leasing will develop at a relatively similar rate and higher investments will be seen in all those segments. “We have the right culture for leasing, and efficient technology,” he says.

SEB’s Johnsson sees great potential in infrastructure projects and says that, in the current financial state, companies will rationalise and invest in equipment rather than hiring more people, which will benefit the leasing sector.

Ahonen hopes to see more international players coming to the Finnish and Nordic market. “We’re quite isolated, and there is a language barrier, but we have seen many international players recently,” he says.

Swedbank’s Enhörning says: “We will probably lower leasing volumes for a little while, just like in 2008, but sooner or later companies will need to renew their fleets, entrepreneurs will need to renew their excavators, and farmers will need new harvesting machines.”

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