Market Data

Covid-19 impacts health of European leasing market


Preliminary data for 2020 from Leaseurope, the trade association representing the European leasing and automotive rental industries, shows that the leasing market contracted in the face of the Covid-19 pandemic.

The data indicates that total new business volumes declined by 13.4% compared to 2019, while the outstanding portfolio remained relatively stable among the member associations reporting.

New business volumes for vehicles fell by 14.2% in 2020, while equipment leasing was also down by 10.4%. Among the main asset categories, real estate leasing underwent the highest downturn of 22.9%.

Most of the national leasing markets across Europe saw deteriorating results, with about two thirds of countries recording double-digit declines in 2020 compared to the previous year. The Baltic countries, Croatia, Portugal and Spain endured the biggest losses, with total new leasing volumes falling by over 20%. In contrast, Ukraine, Turkey and Greece were the only countries indicating growth in new volumes in 2020 while picking up from low levels reached in past years.

Jurgita Bucyte, senior advisor in statistics & economic affairs, Leaseurope (pictured above), said: “In early 2020, the European leasing and automotive rental market seemed poised for another year of growth, however, the preliminary 2020 results show that it was inevitably hampered by the severe impact of the lasting COVID-19 pandemic on economic and social activity globally. A downturn in new leasing volumes was widespread across national markets and asset types. Thus far in 2021, as persisting pandemic-related uncertainty and restrictions weight heavily on investment, European lessors have continued to work their way through the pandemic by leveraging strengths to provide much needed asset financing to facilitate business recovery.”

UK on the up

However, recent data from the Finance & Leasing Association (FLA) suggests the UK asset finance market is on the road to recovery.

Its calculations show that total asset finance new business (primarily leasing and hire purchase) grew by 80% in April 2021 compared with the same month in 2020. In the first four months of 2021, new business was 15% higher than in the same period in 2020.

The commercial vehicle finance sector reported new business up by 140% in April compared with the same month in 2020. The plant and machinery and business equipment finance sectors reported new business up by 58% and 43% respectively, over the same period. By contrast, the IT equipment finance sector reported new business 13% lower in April than in the same month in 2020.

Kilkelly geraldine 400

Commenting on the figures, Geraldine Kilkelly, director of research and chief economist at the FLA, said: “The strong growth reported by the asset finance market in April was not unexpected given the adverse impact of the first lockdown on new business levels during the second quarter of last year. The latest figures show that the recovery in April was broad-based, with finance provided for investment in a wide range of vehicles, machinery and equipment. The fall in IT equipment finance new business reflected the relative strength of this sector at the start of the pandemic.

“If the industry maintains the performance we have seen in recent months, it would be on course to reach its pre-pandemic annual new business total by the end of 2021.”