Peter Hunt analyses market statistics
for the year to 30 September 2009

Highlights

The September new business
volumes of FLA members clearly show the impact of quarter end on
the asset finance industry. The business finance market (excluding
big ticket) was up 43 percent on the previous month, yet was still
30 percent down on the September figure for last year. Similarly,
the big ticket market was 32 percent up on the month, yet 32
percent down on last year (and 50 percent down for the third
quarter).

Consumer finance, which showed signs
of decline earlier than business finance, seemed to offer some hope
as its reduction on last year’s monthly figure dropped to single
digits for the first time in a year. No doubt it was buoyed by the
car scrappage scheme and the new vehicle registration plate, both
key drivers in a growth of motor finance of 3.7 percent, at £1.9
billion recording its highest monthly total for 18 months.

On a monthly basis, motor finance
was up 78 percent, though this was primarily consumer led. Business
financing of cars was still down 20 percent on last year, while
consumer finance of cars was up 16 percent on the same period.

The impact of quarter end is shown
very clearly in the big ticket numbers for 2009. The table below
shows another possible trend, that of continuing decline in big
ticket volumes. Having remained fairly buoyant into early 2009, the
big ticket market now appears to have slowed considerably.

September threw up a series of other
interesting and to some extent conflicting statistics. At £314
million (€348 million), commercial vehicles volumes were at their
highest monthly total for six months, no doubt supported by the
final availability for the government’s reduced pollution
certificate incentive on Euro 4 and 5 trucks (as well as the new 59
registration plate). Nonetheless, finance volumes were still down
27 percent on last year, compared to truck registrations up 5
percent on 2008 volumes and vans down 22 percent.

At £119 million, business equipment
also recorded its best new business figure for six months (though
only marginally above previous recent months). Property volumes
showed their highest quarterly volumes since the second quarter of
2007, though with a total for the whole quarter of £67 million the
uplift may be as simple as a change of business focus for one FLA
member. International assets, usually big ticket in nature,
presented the lowest monthly total since this time series began in
2007.

Aircraft, ships and rolling stock
were 50 percent down on 2008’s figure. At £147 million, receivables
financing posted its largest monthly figure since April 2008.

At 23 percent of the business
finance market, residual risk leasing was at its lowest point this
year, with the three-month average below 26 percent compared to the
previous quarter of 33 percent. In the non-car market, volumes of
residual risk leasing have halved in the same period. Relative
volumes of direct, broker and sales finance remained stable.

One piece of good news from the
wider economies came with the announcement that third-quarter
compulsory liquidations and creditors’ voluntary liquidations for
England and Wales were down 5 percent.

Comment

Motor finance was up under 4 percent
while registrations were up over 11 percent, car business finance
lagged business and fleet registrations and commercial vehicle
finance also lagged comparable registration volumes. Lowering
finance penetration in vehicle markets may indicate a lack of
manufacturer support for financing schemes. If this is the case,
finance companies in these sectors will have to fight even harder
to win back lost volumes.

The author is a partner at the
consulting and services firm Invigors, and can be contacted at
peter.hunt@invigors.com