The German leasing market may be slowing down

Germany is an enigma.While being one of
the most mature leasing markets in Europe, it is dominated by small
independent, family-run leasing companies.Also, despite the
vastness of Germany’s credit business, leasing arms of large
players, such as HVB, remain comparatively small.

 

Another unusual factor has been the changes in global and sector
figures for leasing.Latest figures show that the number of
contracts, and value of contracts, for Q1 2007 are fairly steady on
the same period in 2006.However, at the same time, there have been
significant fluctuations in the volume of financing for each
sector, with medical technology seeing particular growth
year-on-year.

The leasing of manufacturing machines also grew, but not by as
much,matching growth trend in this sector during 2006. Growth in IT
during the first quarter, of 9 per cent, while healthy,was slightly
down on the 15 per cent increase during the whole of 2006.The
financing of transport moveables continues to grow apace, by 22 per
cent, above even the 12 per cent growth achieved during 2006,
largely on the back of renewed economic activity.

Furthermore, this has occurred despite a series of changes that
threaten leasing in Germany, including the recent increase in value
added tax, from 16 to 19 per cent, combined with the prospect of
further tax changes affecting leasing, due to come into effect at
the beginning of 2008.

However, overall, it seems, leasing in Germany, while not in the
doldrums, is experiencing a less profitable period. Real estate
leasing has dipped sharply of late, and the increase in value added
tax that came into force at the beginning of 2007 has prompted
banks linked closely with car manufacturers to offer private
customers credit rather than leasing facilities in the second half
of 2006.