Peter Hunt analyses market
statistics for the year to 28 February
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Highlights
It is not clear whether January’s bad
weather had a distorting effect on February’s new business volumes,
but on the face of things it appeared to be a slightly more
positive month.
FLA members (excluding big ticket)
reported volumes 5.8% up on January’s total, with an 11% drop on
the previous year – the most positive year-on-year monthly result
since September 2008.
At £1.03bn (€1.2bn), the total crept
back over the £1bn mark that was breached in the previous
month.
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By GlobalDataJanuary’s big ticket volumes have been
restated indicating a significantly better but still poor start to
the year. Compared to 2009, January’s business was 55% down and
February 75% down.
Motor finance volumes
appear fairly positive, with growth not confined to the consumer
sector. Business car finance was up 3.3% on the month to £344m.
This is 8% higher than the same period
last year but this could be misleading – February was the lowest
volume month in 2009 by some distance and represented only 6.1% of
the annual total, so this year’s apparent growth is from a very low
base.
With the market around 20% down on the
previous year for non-car business finance in each of the last four
months, slowing decline (compared to previous 30%-plus levels)
appears to be experienced across all asset classes.
In fact, IT financing actually showed a
slight growth on last year’s February total.
No doubt funding in some asset classes
will recover more quickly than in others, with commercial vehicles
and plant & machinery still looking very sluggish.
The split between direct,
broker and sales finance has stabilised in recent months, at
approximately 65%/12%/23% of the market respectively. These levels
represent a relative growth in direct finance and decline in broker
finance compared to recent years.
The relative upward trend in direct
finance suggests that banks may be more prepared to release funding
to support their own subsidiaries than into the wider asset finance
market. Assuming this is the case, the attraction of alternative
funding sources looks to remain strong.
Over recent months, FLA members have
reported a fairly stable but slightly improving arrears position,
with all finance products showing a material improvement in arrears
compared to February 2009.
The author is a partner at the
consulting and services firm Invigors, peter.hunt@invigors.com
