European leasing market sees slower growth in H1 2024

Leaseurope, the trade association representing Europe’s leasing and automotive rental industries, has published its leasing market figures for the first half of 2024. While growth in new business volumes continued, it was at a slower pace compared to the buoyant performance of 2023.

Strong growth in 2023

Leaseurope’s 2023 Annual Statistical Enquiry highlighted a robust year for the European leasing market. Total new leasing volumes reached an impressive €447.9 billion in 2023, marking a 10.8% increase from 2022. This strong performance was widespread, with about three-quarters of national markets seeing double-digit growth. Countries like Belgium, Croatia, Greece, Turkey, Latvia, and Poland were standout performers.

The automotive segment, which remains the largest asset category in European leasing, led the charge in 2023. Passenger car leasing volumes surged by 14.5%, while commercial vehicles followed closely with a 14.4% increase. Equipment leasing posted more modest growth of 3.9%, with machinery and industrial equipment—a significant portion of the segment—rising by 2.2%. However, not all sectors saw growth. The leasing of computers and business machines declined by 6.6%, and real estate leasing experienced a steep contraction, falling by 14.2% to €11.7 billion.

Slower growth in H1 2024

Despite the strong performance in 2023, Leaseurope’s latest Biannual Statistical Survey for the first half of 2024 shows a deceleration in growth. Total leasing volumes for H1 2024 reached €195.5 billion, up 5.6% from the same period in 2023. Vehicle leasing continued its strong upward trajectory, with new business volumes rising by 8.6%. However, equipment leasing stagnated, registering a slight decline of 0.5%. Real estate leasing continued its downward spiral, contracting by 7.2%.

This slower growth is attributed to weak business investment, as macroeconomic uncertainties, including inflation and fluctuating interest rates, impacted companies’ spending decisions. However, the decline in equipment leasing was not uniform, with variations across Europe. Some markets recorded strong gains, while others saw significant drops.

“Following upbeat results from our 2023 annual survey, the European leasing business has expanded new business volumes in the first half of this year, despite macroeconomic uncertainties and prolonged weakness in business investment. The ECB’s second interest rate cut this year points to a potential easing of monetary policy, coupled with a continued drop in inflation, which could foster a gradual recovery in business investment.”

Knubben remains cautiously optimistic about the future. According to the latest European Economic Forecast, equipment investment is expected to increase modestly in 2024, with a stronger acceleration anticipated in 2025. This improved investment climate could provide a boost to the leasing sector, according to Knubben, which has long been closely linked to corporate investment trends.