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December 1, 2009

UK Databank

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

By Verdict Staff

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

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