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August 26, 2009updated 12 Apr 2017 4:33pm

UK leasing declining three times quicker than Europe

While total new production, including hire purchase as well as equipment and car leasing, among all Leaseurope members dropped in 2008 by just over 5 percent, among members of the UKs Finance & Leasing Association it declined by 15.1 percent, from 59.1 billion to 50.1 billion

By Brendan Malkin

The rate of decline in equipment finance last year was three
times faster in the UK than it was across the rest of Europe,
according to latest Leaseurope figures.

While total new production, including hire purchase as well as
equipment and car leasing, among all Leaseurope members dropped in
2008 by just over 5 percent, among members of the UK’s Finance
& Leasing Association it declined by 15.1 percent, from €59.1
billion to €50.1 billion.

The FLA said that this fall in the UK figures was caused by the
decline in the value of the pound against the euro, and that, in
fact, in real terms the UK market saw just a 1 percent drop between
2007 and 2008.

Hire purchase (HP) in the UK market, which at the end of 2008
was €4 billion smaller than it was in the German leasing market,
declined even faster than the overall car and equipment finance
market in Britain. HP new production among FLA members totalled
€33.6 billion at the end of last year, a drop of just over €7
billion compared to the same period the year before.

Overall, while new production among Leaseurope members dropped
last year by just over €5 billion to €330 billion, outstandings
during this period increased by €54.1 billion, a 4.2 percent
increase.

The reason for this discrepancy between outstandings and new
production is that the former includes extensions made to contracts
during 2008.

Among the larger European leasing markets, the one hardest hit
last year by the recession was Spain.

New production last year among members of the Association
Espanola de Leasing declined by 35 percent to €14.2 billion, while
Spain’s Association Espanola de Renting, which represents cars and
commercial vehicle lessors, saw new business drop by 9.6 percent to
€3.3 billion.

New production among members of the Bundesverband Deutscher
Leasing (BDL), Germany’s main leasing association, rose by 1.7
percent to €54.6 billion. Outstandings for these members totalled
€144 billion compared to €109 billion for FLA members, meaning
Germany, Europe’s largest leasing economy, has maintained its solid
lead on the UK.

BDL members also transacted last year the most long rental
business in Europe, a total of €54.6 billion.

The UK is ranked third behind Germany and Italy, which had total
outstandings of €135 billion in 2008, a rise of just over 10
percent.

However, the Italian real estate finance market was hit hard
last year by the credit crunch with its new production figure for
the period down by 33 percent to €15 billion.

However, FLA figures do not include real estate, while these are
included in Italy’s.

Also, members of the British Vehicle Rental and Leasing
Association (BVRLA) are separately reported in the latest
Leaseurope figures, although members of the BVRLA can also be FLA
members.

The smaller French leasing market, which had total outstandings
in 2008 of €83.5 billion, saw new production rise last year 3.6
percent to €33.7 billion.

Central and Eastern Europe, large parts of which have seen a
decimation in new production over the past two quarters of 2009,
still managed to see large increases in new business in 2008,
including in Slovenia (up 18.1 percent to €2.1 billion), Romania
(up 22.7 percent to €4.6 billion), and Bulgaria (up 58.9 percent to
€2.08 billion).

The Polish leasing market remained steady with an increase in
new production of 8.6 percent to €9.3 billion, as did the Austrian
market which saw a 7.6 percent rise.

Austria also saw a significant percentage rise of 66.5 percent
in new hire purchase business last year, albeit to a still tiny
base of €1.01 billion.

The rapid collapse in the Latvian leasing market this year was
foreshadowed by a sharp decline last year among members of the
Association of Latvian Commercial Banks by 42.1 percent to €1.04
billion.

With outstandings among members of Rosleasing, the Russian
leasing association, at €28.5 billion, a 33.8 percent increase
year-on-year, there appears to be still considerable room for
growth in the Russian market.

Brendan Malkin

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