Total asset finance new business (primarily leasing and hire purchase) grew in December 2022 by 16% compared with the same month in 2021. In 2022 as a whole, new business was 6% higher than in 2021, according to the Finance & Leasing Association (FLA).
The plant and machinery finance and commercial vehicle finance sectors reported new business up in December by 6% and 7% respectively, compared with the same month in 2021. The business car finance sector reported new business 45% higher over the same period.
FLA figures for December 2022
Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said:
“2022 was a year of two halves for the asset finance industry, with subdued new business growth of 1% in in the first half of the year followed by 12% growth in the second half. The strong double-digit growth seen in recent months has been driven by an easing of supply shortages, customers seeking to secure deals ahead of anticipated interest rate rises, and a surprise rebound in business investment.
“The industry’s support for SME investment in new equipment has been particularly strong, with a record level of asset finance new business provided to SMEs in 2022 of £22.5 billion.
“The strong performance, particularly in the final quarter of 2022, has boosted expectations for 2023, with 72% of asset finance respondents to the FLA’s Q1 2023 Industry Outlook Survey anticipating some new business growth over the next year, up from 47% in Q4 2022.
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“The asset finance market funds as much as 40% of UK investment in machinery, equipment and vehicles and is helping businesses of all sizes as they strive to meet the Government’s net-zero targets.
“We have called on the Chancellor to create a new green super-deduction capital tax allowance in the Spring 2023 Budget that includes leased assets or those acquired via short-term rental so that the industry can support even more businesses to invest in greener assets.”