While the vendor finance channel
formed the largest proportion of German lessors’ business and saw
the largest rise last year, business acquired through banks has
also been on the rise for some time now. But what impact will
refinancing issues have on German lessors in 2010?
The banking channel grew by 9 percent in
volume last year, accounting for 13 percent of all
equipment-leasing business transacted.
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The BDL, Germany’s leasing association, termed
this segment’s growth as “remarkable”, adding that the rise in
leasing business acquired through banks is in “response to
increasing customer-side demand”, which has led to more banks
offering leasing as a financial product.
With 63 percent of non bank-owned leasing
companies saying they could not do adequate new business due to a
lack of refinancing, it is no surprise that customers are turning
to cash-rich banks for their leasing needs. Although to some extent
the outlook for refinancing looks better in 2010 than it did in
2009, it is likely that banks will continue to hold the upper hand
for some time.
For the banks, because leasing offers a
‘safer’ income model to traditional lending – thanks to the
inherent asset behind every deal – it is also an appealing product
for them. But the banking channel is still far off from catching up
with the vendor finance and reseller channels, which made up just
over half – 54 percent – of new business last year.
This segment, which also includes captive
lessors, saw an above-average increase of 11 percent last year,
testament to the popularity of vendor partnerships. This 11 percent
rise could be attributed to manufacturers looking for ‘safer’
conduits for selling their products, especially pertinent in a
recession.
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By GlobalDataThe broker channel – which has traditionally
been weak in Germany – only formed 6 percent of new business last
year, and this is not expected to change as long as demand for
finance outstrips supply.
Perhaps unsurprisingly, direct business was
the only channel which saw a net decrease in business last year.
Indeed, the direct business channel – defined as new business
acquired through leasing companies’ own sales teams – saw business
fall by three percent last year to 26 percent of total new
business, perhaps also because of lessors encountering difficulties
when refinancing.
“Refinancing will remain difficult in 2010,”
said Friedhelm Westebbe, managing director of the BDL.
Although he expects existing market trends –
especially with regard to vendor leasing – to continue, non
bank-owned companies will continue to suffer.
