FLA asset finance figures suggest broad-based recovery in investment

Latest figures from the Finance & Leasing Association (FLA) show that asset finance new business grew by 17% in March compared with the same month last year and was 13% higher in the first quarter of 2014 than in Q1 2013.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “In Q1 2014, the asset finance industry returned its best first quarter performance for five years, and the pattern of growth suggests a broad-based recovery in business investment.”

Finance for plant and machinery and business equipment saw the strongest growth in the first three months of the year, up by 21% and 20% respectively. Growth in commercial vehicle finance remained robust at 19%, while IT equipment finance was 11% higher than in Q1 2013. Total new business spend reached £2.35bn.

“The industry reported higher levels of finance provided to businesses in the agricultural, construction, manufacturing and services sectors in the first quarter,” Kilkelly said.

The FLA is also reporting strong growth in consumer new car finance volumes, which rose by 21% in March compared with the same month in 2013, and were up by 23% on Q1 2014. Three quarters (74.8%) of private new car sales in the twelve months to March 2014 were financed by FLA members. Advances to this market in March totalled £2.39bn, a 26% rise on the previous year.

The consumer used car finance market reported its strongest growth so far in 2014, with new business volumes 29% higher in March than the same month last year. As a result, volumes were up by 24% in Q1.

Kilkelly said: “Growth in the consumer motor finance market showed no sign of weakening in March. Personal Contract Purchase remains the most popular finance option when consumers buy a new car from dealerships. It has also grown in popularity in the used car market, but the majority of used cars financed in the showroom are on hire purchase.”

Volumes of new car sales to business were also up in March, increasing by 26% compared to the previous year. The volume of used car sales to business was down by 36% over the same period.