Growth in UK sales-aid finance outstripped general leasing business growth in 2012 as manufacturers seek to boost sales amid a traditional lending "collapse", according to LPM Outsourcing (LPMO).
The leasing outsourcing firm highlighted figures from the Finance & Leasing Association which showed sales finance provided by manufacturers rose 11% year-on-year to £5.9bn in 2012 while total leasing business grew by 3% in 2012, to £21.9bn.
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The company suggested the growth in the sector was caused by more manufacturers trying to get finance to their customers, "in order to make up for the collapse in traditional lending through banks."
Ian Dennis, business development director at LPMO, said: "Lending conditions, especially to SMEs, have been so tough for so long that manufacturers are increasingly using captives and other sales finance to unlock sales."
Dennis said LPMO has heard from manufacturers interested setting up both captive finance programmes and vendor partnerships with leasing companies.
Dennis added: "Captives can be viewed as a key growth strategy among many medium and larger manufacturers as the margins at which the loans are made can be very attractive.
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By GlobalData"Some manufacturers have long-established and profitable credit and leasing businesses and the on-going credit squeeze has been a catalyst for others to do the same."
