The UK asset finance market reached record levels last year as demand grew 6%, according to the Finance & Leasing Association (FLA).
Latest FLA figures show that total asset finance new business (primarily leasing and hire purchase) reached a record level of £35.7 billion.
In the final month of the year, business only grew by 1% compared to December 2018, but the record was secured by strong performances earlier in the year.
During December 2019, the IT equipment finance sector continued to report double-digit growth as new business increased by 10% compared with the same month in 2018.
By contrast, the commercial vehicle finance and plant and machinery finance sectors reported falls in new business of 2% and 22% respectively, over the same period, potentially reflecting uncertainty as companies waited for the results of a general election and future clarity on Brexit.
In 2019 as a whole, the commercial vehicle finance and plant and machinery finance sectors reported the strongest growth rates, with new business up by 9% and 5% respectively, compared with 2018.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance industry reached a record level of new business in 2019, despite continued weakness in business investment. Within the overall total, more than £20 billion went to SMEs to fund investment in machinery and equipment, 4% higher than in 2018.
“Key industry sectors benefitted from using asset finance last year, with double-digit growth in new finance provided for construction and manufacturing equipment.”
UK Asset Finance Market 2019
| Dec 2019 | % change on
prev. year |
3 months to
Dec 2019 |
% change on
prev. year |
12 months to
Dec 2019 |
% change on
prev. year |
|
|---|---|---|---|---|---|---|
| Total FLA asset finance (£m) | 2,943 | 1 | 8,679 | 1 | 35,653 | 6 |
| Total excluding high value (£m) | 2,605 | 0 | 7,970 | 0 | 33,008 | 5 |
| By asset: | ||||||
| Plant and machinery finance (£m) | 530 | -22 | 1,677 | -9 | 7,320 | 5 |
| Commercial vehicle finance (£m) | 693 | -2 | 2,186 | -7 | 9,136 | 9 |
| IT equipment finance (£m) | 376 | 10 | 840 | 25 | 2,830 | 3 |
| Business equipment finance (£m) | 231 | 2 | 603 | -9 | 2,465 | -2 |
| Car finance (£m) | 754 | 8 | 2,382 | 4 | 9,998 | 4 |
| Aircraft, ships and rolling stock finance (£m) | 35 | 17 | 116 | -5 | 566 | 88 |
| By channel: | ||||||
| Direct finance (£m) | 1,279 | -5 | 3,987 | -1 | 16,680 | 5 |
| Broker-introduced finance (£m) | 522 | 1 | 1,689 | 1 | 6,782 | 9 |
| Sales finance (£m) | 804 | 7 | 2,294 | 1 | 9,546 | 2 |
| By product: | ||||||
| Finance leasing (£m) | 339 | -15 | 1,088 | -8 | 4,378 | 3 |
| Operating leasing (£m) | 640 | 7 | 1,815 | 1 | 6,984 | 1 |
| Lease/Hire purchase (£m) | 1,458 | -5 | 4,476 | -4 | 19,305 | 6 |
| Other finance (£m) | 336 | 35 | 930 | 44 | 3,587 | 18 |
Source: FLA
Written by John Maslen
Source: Asset Finance International