The UK’s 35 largest manufacturers have increased the amount of credit they provide to customers by 38%, from £10.8bn (13.02bn) to £14.9b, since the start of the 2007 financial crisis, according to research conducted by asset finance sector service provider LPM Outsourcing (LPMO).
The research suggests manufacturers have been increasing lending to customers in order to fill the void left by banks, which are restricting lending to combat higher capital requirements.
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This has also led to several manufacturers creating captive lending arms, according to LPMO.
Ian Dennis, business development director at LPMO, said "The on-going reluctance of banks to fund means that manufacturers are now in an excellent position to expand their captive financing programmes.
"Most manufacturers have a thorough understanding of their customers and the re-sale value of their assets, so may feel that setting up an in-house lending solution is a very natural step. Captives are viewed as a key growth strategy amongst many medium and larger manufacturers as the margins at which the loans are made can be very attractive."
"Some manufactures have been very successful in developing a profitable leasing business and the credit crunch has been a catalyst for the others to do the same."
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