One key trend likely to occur this year is the further diversification of leasing companies – gone are the days where lessors can afford to simply offer leasing products to their customers. Like it or not, the leasing industry is slowly becoming an asset finance industry.
Indeed, at a straw poll at Leaseurope’s annual convention last October, over half of the attendees agreed that the industry needs to broaden its scope to satisfy customers in the future. Another quarter said that they had already widened their product portfolio to include other asset-based finance products.
Although some of the larger players have already integrated their leasing divisions with other divisions – such as GE Capital, which brought its fleet, contract hire, business lending, factoring and equipment finance divisions together, or CA Leasing and Eurofactor sharing functions – it remains to be seen whether smaller lessors will also develop their product portfolio.
Certainly, some players in the UK market have already started. At the end of 2009, Close launched Close Commercial Finance, bringing together its leasing arm with the bank’s factoring business.
Davenham and State Securities have also moved to diversify their products in past years.
“It’s an obvious move for both types of companies – either asset finance companies going into invoice discounting [ID], or factoring and ID companies going into asset finance,” said Andrew Bullard, formerly sales director at State Securities, and now head of business at Cashflow UK.
“But I haven’t seen as much movement as I would have expected. It’s been done in a limited way, but I am surprised there haven’t been more players.”
As the market starts to recover this year – and as confidence returns to the marketplace – lessors across Europe are likely to adopt this new growth strategy, cross-selling more products to more customers. It isn’t a question of whether this will happen, but when.