While the German leasing market has
been hit by slackening demand from SMEs and a depressed car market,
there is still room for optimism in 2010. Jason T Hesse
reports.
One key indicator of the impact that
the financial crisis has had on the German market is that 63
percent of all non bank-owned lessors felt they could not write
adequate new business due to a lack of refinancing.
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“The number of refinancing partners has
decreased, and it’s still difficult to find new ones,” explained
Friedhelm Westebbe, the managing director of the BDL, Germany’s
leasing association. “The situation is still very serious.”
According to the latest statistics from the
BDL, the market has decreased by 20 percent in 2009, and will
remain stagnant next year. Kai-Otto Landwehr, the CEO of Siemens
Finance & Leasing GmbH, pointed out this fall was driven by the
car industry, however – which has been badly hit.
Cars formed 49 percent of German lessors’
portfolios at the end of last year, so the crash in car residual
values was bound to have a major impact on leasing.
“The automobile industry is facing a
disastrous year,” Joachim Gürtler, a senior researcher at the Ifo
Institute, Germany’s leading economic research body, confirmed.
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By GlobalDataMoreover, according to Gürtler, things are not
set to improve next year. Current studies estimate a decline of new
registrations of about one million units to only 2.7 million cars
in 2010. For an industry with a penetration rate of 60 percent on
cars, this is ominous news.
But cars are not the only reason why German
lessors are suffering. Business investment by SMEs – 80 percent of
lessors’ customer portfolios – has contracted by 21 percent,
according to the Ifo.
Although the institute expects this contraction will continue,
albeit more mildly, at around 8 percent to 9 percent throughout the
first three quarters of 2010, Siemens’ Landwehr remains optimistic
about SME business investment.
“I am a positive person, and this is a very
important market for us. The demand for financing from SMEs didn’t
decrease, but their financial situations probably kept some away
from taking the next step [towards leasing],” he said.
One thing is for certain – there certainly is
scope for leasing to grow in Germany. While lease penetration rates
for all assets except big-ticket items float around 25 percent to
27 percent in the UK and even higher in the US, penetration in
Germany is lower, at around 16 percent to 17 percent. And even
though Westebbe expects the market to be flat next year, lessors
can still expect growth in key areas such as IT and medical
technology, since these tend not to be as cyclical as other
sectors.
With the economy set to start improving,
leasing will certainly play a vital role.
“At the end of the day, cash is king for SMEs,
and leasing is the best tool to ease their problems,” Westebbe
said. “We have to stay positive.”
