Highlights
July’s FLA business finance
statistics showed a series of interesting developments, perhaps
none more so than the headline volume. Some heart can be taken from
the fact that at £1.5 billion (€1.7 billion), business finance
volumes (excluding big ticket) were the highest since March’s
quarter/ year end.
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On a year-on-year basis a
drop of 20 percent was the smallest decline for nine months, and
maybe illustrated some faint signs for hope.
Big ticket financing fared less
well. At £217 million, July was the lowest monthly volume for 29
months and perhaps vindicates recent market concerns about the
strength of big ticket sales pipelines.
Interestingly, the asset category
‘Aircraft, ships and rolling stock’ held up at £121 million.
Consumer and motor finance are also
down, but again this is less pronounced than in business finance.
Business financing of cars, at £548 million, was at its highest
level this year, up 30 percent on the month and only 12 percent
down on 2008’s July total.
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By GlobalDataThis looks like a fair performance,
as registrations in the fleet market were down 18 percent on 2008
while small fleets showed a slight increase in registrations.
Notably, a couple of other asset
categories performed well. IT showed a second successive monthly
gain and was 42 percent up on last year’s July total.
Property showed a 700 percent gain
on last year and while it still only recorded a volume of £32
million, July provided the highest monthly total since February
2008.
Plant and machinery continues to
suffer, though at least an annual reduction of 36 percent is an
improvement on the previous four months.
Commercial vehicles finance volumes
were down 19 percent on last year. While this may suggest signs of
bottoming out, the SMMT reported demand weaknesses, with July
registrations down 37 percent for vans and 43 percent for
trucks.
The market excluding big ticket was
dominated by direct finance, which exceeded £1 billion for the only
time this year.
This rise was not reflected through
other routes to market. In particular, sales finance at £266
million was only £13 million above its low point for the year and
third lowest of the last 36 months, 42 percent down on last year’s
total.
While direct finance’s share of the
non-big ticket market rose to 69 percent, the highest since
December 2006, sales finance took only 18 percent of the market,
presumably as a number of the major players continue to restructure
or retreat.
Another new statistical indicator
will come as no surprise. In the second quarter compulsory
liquidations and creditors’ voluntary liquidations in England and
Wales were up 39 percent on last year and 3 percent on the quarter,
with voluntary liquidations being the main driver of this growing
number.
The Bank of England’s Agent Summary
for July suggested a continuation of weak demand for corporate
credit as companies wrestle with demand uncertainty in their own
industries and concerns over working capital.
More positively, de-stocking has
slowed with excess inventories wound down, suggesting the potential
for increased throughput of product at the dealer level.
Comment
While only one month’s
data, July suggests more positive signs for the finance industry
though other data is sobering and any upturn is likely to be
sporadic rather than straight-line.
Finance companies should
watch market data carefully over the coming months to identify
trends and opportunities ahead of their competitors.
The author is a partner at the
consulting
and services firm Invigors, and can be contacted at
peter.hunt@invigors.com y
FLA new business finance –
July 2009
|
£m |
Month-on-month (%) |
Change on same month last year |
Year-to-date (£m) |
Year-to-date change |
Rolling 12 months |
Rolling 12 months yr-on-yr |
|
|
Business finance excluding big ticket |
1,505 |
19.3 |
-20.1 |
9,229 |
-34.5 |
17,807 |
-26.8 |
|
Big ticket |
217 |
-42.6 |
-51.9 |
2,704 |
-25.6 |
5,220 |
-8.2 |
|
Consumer finance |
4,375 |
-5.5 |
-16.3 |
30,789 |
-17.5 |
54,094 |
-16.4 |
|
Motor finance (extracted from totals |
1,451 |
0.3 |
-5.5 |
9,278 |
-20.7 |
15,754 |
-18.4 |
|
Source: FLA |
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