Peter Hunt analyses market
statistics for the year to 30 September.
Go deeper with GlobalData
Highlights
Though not as strong as June’s
figures, September’s quarter end volumes offered an increase over
the previous two months.
In so doing, FLA business finance
volumes excluding big ticket showed small year-on-year growth (up
1.1%). Annual growth has been achieved in six of the last seven
months, suggesting positive momentum within the market, albeit
fairly fragile.
Having plumbed new depths in August
with total market volumes of only £46m (€54m), big ticket
(transactions over £20m) showed some improvement, with the £211m
new business level representing a massive monthly change (up 361%)
and the second highest monthly total in 2010.
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By GlobalDataNotably this is still more than £100m
lower than the weakest month in 2008; with year-to-date big ticket
volumes over 50% down on last year. In the 12 months to September,
the big-ticket market totalled £1.8bn, under 10% of the total
business finance market.
Consumer finance continues to look
weak, with three-month moving averages staying stubbornly below
2009 figures and year-to-date volumes 6% down on last year.
Overall motor finance continues to
grow, though this appears to be more driven by consumer than
business financing despite the cessation of the government’s
scrappage scheme.
Motor finance in the business sector
grew 3.3% in September compared to last year, but the three-month
moving average figure (used to remove some reporting distortions
and monthly spikes) has moved marginally downward after strong
growth early in the year. Total business registrations were up 5%
in September, driven by the fleet sector. For the full year, the
Society of Motor Manufacturers and Traders predicts total
registrations will exceed 2m cars, up on 2009.
The aggregate finance volumes of
non-car assets exceeded £1bn for the third time in 2010. Not
surprisingly, the other two occasions were March and June quarter
ends. There was a noticeable spike in plant and machinery
financing, which at £331m posted its best month this year.
By contrast, at only £25m, aircraft,
ships and rail posted its lowest monthly total for over three years
(£1m lower than the previous month). The figures for international
assets have remained around 80% down on last year’s volumes
throughout 2010. IT financing remains in the doldrums, still over
20% down, year-to-date.
Sales finance presented very strong
September figures to take 28% of the market (its highest for the
year), while broker-introduced business slipped to 13% (equalling
its lowest for the year) while direct finance slipped below 60% for
the first time in over a year. It will be interesting if these are
one-off figures or whether a new phase of the recovery is emerging,
perhaps with greater lending capacity becoming available to
non-bank funders.
Comment
While FLA figures remain steady,
positive but perhaps inconclusive, a snapshot from the wider
economy suggests the general outlook is quite positive. Growth of
light commercial vehicles continues (up 24% in September and 18%
year-to-date) though truck registrations are down, coach
registrations are up, but bus registrations are down.
A recent confidence survey by the
British Print Industries Federation suggests a positive outlook in
that sector, with orders and production showing a gradual
improvement. A similar survey by the Manufacturing Technologies
Association highlighted a likely material increase in investment
levels.
Figures from the construction industry
highlight recovery, but still a long way short of pre-recessionary
volumes. Third-quarter compulsory liquidations and creditors’
voluntary liquidations in England and Wales fell 14% on last year.
Many of these factors should lead to improved trading conditions
for finance companies in 2011.
The author is a partner at the consulting and services firm
Invigors, peter.hunt@invigors.com
See also: FLA data, 12
months’ view
