Frankfurt, 23rd November 2011 – The equipment-leasing market has grown by 12 percent over the current year and has generated 46.0 billion euro’s worth of new business. Adding on the 2.5 billion euro generated through the leasing of real estate, the value of investments financed by the German leasing industry comes to 48.5 billion euro. “The leasing sector has transacted considerable amounts of new business, and has achieved above-average profits as a result of a rapid increase in investment activity coupled with particularly strong demand for mechanical-engineering products, electrical goods and vehicles,” explained Martin Mudersbach, President of the German Leasing Association (Bundesverband Deutscher Leasing-Unternehmen, BDL) at yesterday’s annual press conference. The leasing sector has thus significantly extended its share of the investment market over the past 12 months.
Although the rate of growth in recent weeks has eased as a result of macroeconomic developments in the final quarter, the sector remains optimistic. “At worst, we are expecting a temporary cooling off in economic activity. The Ifo Institute’s Investment Indicator is pointing to strong growth in 2012, so we’re expecting to find ourselves in positive territory again in the coming year.”
By the end of 2011, the leasing penetration rate will have risen to 21.4 percent, since new business generated through the leasing of equipment is growing at a stronger rate than overall investment in equipment, which, according to the Ifo Institute’s current estimates, will have increased by just 8.4 percent. “In 2011, as in earlier years, leasing has been the SME sector’s trump card when it comes to financing investments,“ explained the BDL President. And in the wake of the most recent financial upheavals, it will probably be given more serious consideration than ever before as an investment tool. This, at any rate, is one of the views expressed by the authors of the recent TNS Infratest market study “Leasing in Deutschland 2011”.
Types of Goods Leased
The value of the largest category of assets leased, Road Vehicles (including motor cars and commercial vehicles), increased by 13 percent. “Overall growth in the leasing of vehicles would have been much stronger had it not been for the downturn in leasing to private motorists,” explained the BDL President. The dis-inclination of private motorists to invest in new vehicles is a continuing consequence of the German government’s car scrappage scheme. According to the Federal German Motor Transport Authority, the number of new commercial vehicles registered in the first three quarters of 2011 was up by 15 percent, compared with an increase of less than 5 percent in the number of new vehicles registered by private owners. The value of new leasing business transacted with private households fell by seven percent.
The strongest growth was recorded in the Production Machinery segment (+ 21 percent). Current demand is strong, and the leasing industry also benefited in 2011 from the belated appearance in balance sheets of profits generated by the spate of orders placed during the upturn in the economy following the financial crisis of 2008-2009. The reason for this “delayed action“ is long lead times in the machine-building sector. Equipment-leasing agreements only become effective (and the new business they generate recorded in statistics) after the customer takes delivery of the machinery in question. “As delivery times for machinery remain extremely long, the build-up in new, but unrecorded, business could continue into the second quarter of 2012,” said Mudersbach.
Office Equipment and IT Systems also moved into positive territory. Having lost a slight amount of ground in 2010, this segment has recovered well, and expects to record a six percent increase in new business by the end of the year.
The amount of new business transacted in the Aircraft, Watercraft and Rail Vehicles segment is 16 percent down on the figure for 2010. “This segment is largely driven by big-ticket transactions, and is therefore subject to pronounced fluctuations,“ explained Mudersbach. In the year ended 31st December 2010, it recorded a healthy plus. The situation in the real-estate segment is similar. Leasing of production buildings and warehouses in the current year is down by 29 percent, and leasing of sales premises and office buildings by 45 percent. Thus, the volume of business transacted through the leasing of real estate has fallen by 40 percent to 2.5 billion euro after having more than doubled in 2010 as a result of a small number of high-value investments. Be that as it may, the overall leasing market (i.e. equipment and real-estate leasing) looks set to increase by 7.0 percent for the current year.