When I began writing for this title in the summer of
2008, the business environment of the asset finance industry was
being turned on its head by the onset of the global financial
crisis.
What followed, after initial damage
control measures had been enacted on a global scale by the big
networks, was a period of intense self-analysis for the sector.
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This manifested itself first on an
operational level – how do we approach risk, and how will that
impact the sales process?
Do we suffer the overheads involved in
direct sales, or do we have capable enough risk assessment to
approach the market through intermediation? And so on.
Next came the bigger questions – do we
deliver sufficient returns to our investors to justify the
capital-intensive nature of our businesses? Are we efficient enough
as an industry?
In fact – come to think of it – does
leasing and asset finance have a future as an industry, or just a
product?
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By GlobalDataFor the past year I have been editing
this magazine’s sister title, Motor Finance, which covers
the UK car finance business.
Having now returned to Leasing
Life, I am eager to see how – or if – the answers to questions
have developed.
Certainly, they are now being asked in
the context of long-awaited growth.
While many of our readers have been
enjoying a well-earned summer break, the Leasing Life team
has been busy poring over the financial reports of Europe’s lessors
to get the latest indication of just how firm that growth is.
Indeed, the H1 results of several
asset finance businesses have revealed a general pattern for growth
on the previous year, and things at first glance appear bright.
In Germany, for example, the
financial services divisions of Volkswagen and BMW, as well as
perennially energetic Grenke Leasing, all saw year-on-year growth
in profits. This reflects optimism that started with the 2010
annual report of the German Leasing association, the Bundesverband
Deutscher Leasing-Unternehmen.
The report showed the German equipment
leasing market growing by 2.5% in 2010 as Germany emerged from
recession, following a steep 21% drop in the market after 2008.
Encouraging as this news is, the peaks
of business seen in the pre-crisis market are yet to be reached in
most cases. A notable exception is BMW Financial Services, which
showed not just growth, but record pre-tax profits for the first
half of 2011.
And with so much ground left to
regain, one can’t help but feel perturbed by the increasing
nervousness the sovereign debt crisis is spreading, and by the
fragile-seeming reports of quarterly and half-yearly growth from
major European economies.
One concern shared by directors of
businesses large and small as they return from their breaks will be
the issue of how global leaders will handle the current crisis.
Should growth falter, and the dreaded
double-dip materialise, how can the leasing industry maintain the
steady recovery of the past 12 months?
The weather will soon be turning along
with the leaves as Autumn blows in.
What is less certain is how Europe’s
economic weather will develop, and what the long-term climate has
in store for leasing.
Fred Crawley
fred.crawley@vrlfinancialnews.com
