Total asset finance new business (primarily leasing and hire purchase) grew by 106% in May 2021 compared with the same month in 2020, according to new figures released by the Finance & Leasing Association (FLA).

In the first five months of 2021, new business was 26% higher than in the same period in 2020.

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The commercial vehicle finance sector reported new business up by 126% in May compared with the same month in 2020. The plant and machinery and business equipment finance sectors reported new business up by 58% and 20% respectively, over the same period.

By contrast, the IT equipment finance sector reported new business 29% lower in May than in the same month in 2020.

Geraldine Kilkelly, director of research and chief economist at the FLA, said: “The broad-based recovery in the asset finance market continued in May as businesses have become more optimistic of a strong economic recovery.

“The significant growth rates reported in April and May reflect the impact on new business levels of restrictions to deal with Covid-19 during the first lockdown and we expect these to moderate in the coming months. Nevertheless, the industry is on track to return to pre-pandemic levels of new business during this year.

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“Our latest research also shows a rebound in the share of UK investment in machinery, equipment and purchased software financed by FLA members which reached 37.1% in Q1 2021.

“We continue to urge the Government to recognise the importance of the asset finance market in supporting business investment and extend the super-deduction allowance for expenditure on qualifying plant and machinery to include leasing.”

Motor finance

The consumer car finance market reported growth in new business volumes of 327% in May 2021 compared with the same month in 2020. In the first five months of 2021, new business volumes were 37% higher than in the same period in 2020, the FLA said.

The consumer new car finance market reported new business volumes up by 514% in May compared with the same month in 2020, while the value of new business grew by 555%.

In the first five months of 2021, new business volumes in this market were 32% higher than in the same period in 2020. The percentage of private new car sales financed by FLA members in the 12 months to May 2021 was 92.9%.

The consumer used car finance market reported new business volumes up by 270% in May compared with the same month in 2020, while the value of new business grew by 293%. In the first five months of 2021, new business volumes in this market were 39% higher than in the same period in 2020.

UK asset finance market grew by 80% in April 2021: FLA