Frankfurt, 22nd November 2012 – In 2012, the leasing industry served as the conduit for just under 50 billion euro’s worth of investment. New business was thus very slightly higher than in 2011 (up 0.5 percent). “In view of the current economic mood, and the inhospitable investment climate, we are satisfied with this result,” commented Martin Mudersbach, President of the German Leasing Association (Bundesverband Deutscher Leasing-Unternehmen). As in the preceding year, the sector increased its share of the overall investment market. “Even in the present weak state of the economy, leasing companies are proving themselves to be partners that small and medium-sized companies can depend on.”
In total, the leasing sector enabled its customers to invest 49.3 billion euro in vehicles, machinery, IT equipment, and other capital goods. The leasing of road vehicles accounted for most of the new equipment business transacted. With the exception of one or two innovative market segments, such as Medical Technology and Renewable-Energy Plants, demand for the acquisition of assets was in decline right across the board. “This general reluctance to invest is a consequence of the euro crisis,” explained Mudersbach, pointing to a two-percent fall in aggregate investment in equipment. “But although businesses have been investing less, they have increasingly been turning to leasing as a financing tool.” Thus, the leasing sector’s share of aggregate investments rose from 15.1 percent in 2011 to 15.5 percent for the current year. The leasing penetration rate in the Equipment segment has increased from 22.2 percent in 2011 to 22.7 percent. “Leasing currently accounts for 53 percent of all externally financed investments. It has left all other forms of external financing in its wake,” added Mudersbach.
The BDL President believes that future developments will be shaped by companies’ willingness to invest, which will depend on how confident they feel about the stability of the eurozone. “Signs of an upturn are beginning to appear, but an overall improvement in the investment climate any time before the second half of 2013 is unlikely. We expect the levels of new leasing business acquired next year to remain in line with current levels.” Mudersbach believes the speed at which the automobile market recovers will be crucially important. Road vehicles account for 69 percent of all new business generated, which makes them by far the largest group of assets leased.
Types of Goods Leased
The leasing of road vehicles, which includes cars and commercial vehicles, rose by 2.0 percent in 2012. However, this growth was largely achieved in the first half of the year, after which there was a significant slackening in demand. German Motor Transport Authority statistics indicate that while there was an increase of two percent in new commercial-vehicle registrations in the first three quarters of 2012, there was a fall of more than seven percent in the number of new private vehicles registered during this period. And as the leasing business transacted with private customers is restricted almost exclusively to the leasing of vehicles, the volume of new business acquired from private households fell by 8.0 percent.
Production Machinery is the second most important group of leased assets. Following the boom year of 2011, however, this market segment contracted by 2.4 percent. “In view of recent developments in the engineering sector, it’s not surprising that the result achieved in 2011 could not be matched,” commented Mudersbach. The leasing of IT equipment was particularly hard hit in 2012 by the deterioration in the economic climate, and the volume of new IT business fell by 6.1 percent. “IT leasing reflects business sentiment with seismographic sensitivity, so the reduction in demand seen in the first few months of the year was an ominous sign. If the outlook is uncertain, companies reduce their expenditure, and investments in IT equipment are generally the first cutback to be made,” the BDL President explained.
Growth Potential
There were positive developments in two market segments: “Real Estate”, and “Information and Signalling Systems, Renewable Energies, Medical Technology and Other Equipment”. New real-estate business was up by 1.4 percent, and following the roller-coaster developments of recent years, this segment appears to have stabilized at around 2.2 billion euro. While the leasing of production buildings and warehouses increased by 4.8 percent, new business acquired through the leasing of trade and office buildings was little changed (up by just 0.5 percent).
New business in the “Information and Signalling Systems, Renewable Energies, Medical Technology and Other Equipment” segment increased by 2.0 percent in 2012. Most of this growth was achieved through the leasing of medical equipment and renewable-energy plants. The BDL President believes these two asset groups hold considerable potential for the leasing industry. “Immense investments will be required in connection with the turnabout in Germany’s energy strategy, and these could be financed through leasing. In the health-care sector as well, leasing is enabling hospitals and medical practices to take full advantage of the latest technological developments”. Mudersbach is convinced that leasing packages containing attractive service components are the best way of financing high-tech equipment with short innovation cycles.