Commercial vehicle finance was one of the only growth markets during August for UK asset finance new business (primarily leasing and hire purchase), according to new figures from the Finance & Leasing Association.
Finance for commercial vehicles was up 11% year-on-year in August and it has risen 14% over the past 12 months.
Other sectors were less buoyant, with plant and machinery up 1% during August compared to the same month last year, while business equipment finance and car finance were down 1%. Aircraft, ships and rolling stock finance nearly doubled, but it only makes up a small proportion of the asset finance market.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “August saw further double-digit growth in new finance provided for commercial vehicles as businesses were keen to invest in the newest technology.
“The strong performance of the industry so far this year meant it funded over 41% of investment in machinery, equipment and purchased software in Q2 2019, an 11-year high.”
Responding to the results, Chirag Shah, chief executive officer, Nucleus Commercial Finance, said: “We’re seeing more and more SMEs turn to asset-based finance to support their business ambitions, whether that be to restructure, deliver further growth or to enhance their cash flow.
“Despite the growth in the market, a major knowledge gap still exists when it comes to SME funding, particularly how asset-based lending solutions can be used to help businesses achieve their goals by leveraging assets such as property, stock and machinery. There is a big opportunity for the market to continue growing and it’s therefore our responsibility as an industry to educate SMEs on all the options available and to demonstrate the positive impact alternative finance can have on a business.”
| August 2019 | % change on
prev yr |
3 mths to
August 2019 |
% change on
prev yr |
12 mths to
August 2019 |
% change on
prev yr |
|
|---|---|---|---|---|---|---|
| Total FLA asset finance (£m) | 2,452 | 0 | 8,778 | +5 | 34,311 | +6 |
| Total excluding high value (£m) | 2,321 | +1 | 7,946 | +2 | 31,820 | +5 |
| By asset: | ||||||
| Plant and machinery finance (£m) | 585 | +1 | 1,842 | +5 | 7,343 | +11 |
| Commercial vehicle finance (£m) | 667 | +11 | 2,256 | +11 | 9,110 | +14 |
| IT equipment finance (£m) | 166 | -16 | 704 | -15 | 2,692 | 0 |
| Business equipment finance (£m) | 211 | -1 | 1,626 | -4 | 2,622 | +4 |
| Car finance (£m) | 572 | -1 | 2,269 | +2 | 8,935 | -2 |
| Aircraft, ships and rolling stock finance (£m) | 19 | +95 | 173 | +126 | 533 | +115 |
| By channel: | ||||||
| Direct finance (£m) | 1,160 | 0 | 4,042 | +4 | 16,086 | +6 |
| Broker-introduced finance (£m) | 513 | +6 | 1,627 | +5 | 6,574 | +12 |
| Sales finance (£m) | 648 | 0 | 2,276 | -3 | 9,160 | -2 |
| By product: | ||||||
| Finance leasing (£m) | 310 | +4 | 987 | +2 | 4,321 | +11 |
| Operating leasing (£m) | 430 | -2 | 1,478 | -2 | 6,098 | -4 |
| Lease/Hire purchase (£m) | 1,373 | +3 | 4,927 | +7 | 19,408 | +10 |
| Other finance (£m) | 270 | +13 | 954 | +3 | 3,252 | +6 |
Source: FLA
Written by John Maslen
Source: Asset Finance International