Falling demand for asset finance accelerated in the UK during May as new business dropped 60% compared to the same month last year, according to the Finance & Leasing Association (FLA).
FLA figures show that total asset finance new business (primarily leasing and hire purchase) declined 44% in the three months to the end of May, compared to the same three months last year.
The commercial vehicle finance and business new car finance sectors were hit particularly hard, with demand down 62% and 87% respectively.
In the business equipment finance and plant & machinery sectors, new business fell 40% and 44% respectively year-on-year, while IT equipment finance continued to perform relatively strongly with modest falls of 4%.
The FLA figures show that falling demand has accelerated as the Coronavirus pandemic has taken hold; the year-on-year decline reached 28% in March and 47% in April before the latest 60% fall for May.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance market reported its lowest level of new business for more than 13 years in May, with the vehicle finance sectors continuing to be hardest hit by the lockdown restrictions. The IT equipment finance sector was the only sector to report growth in the first five months of 2020.
“Our latest figures show that the industry provided finance for almost 40% of UK investment in machinery, equipment and purchased software in the year to March 2020.
“If this support for business investment is to continue as well as meeting the huge demand for forbearance, the Government needs to take action to support all lenders, including non-bank lenders, by allowing them to access to funding as suggested in the FLA’s Term Funding Pipeline proposal.”
|May 2020||% change on prev. year||3 months to May 2020||% change on prev. year||12 months to May 2020||% change on prev. year|
Total FLA asset finance (£m)
|Total excluding high value (£m)||1,090||-62||5,309||-43||28,726||-12|
|Plant and machinery finance (£m)||365||-44||1,371||-32||6,530||-11|
|Commercial vehicle finance (£m)||291||-62||1,300||-51||7,734||-15|
|IT equipment finance (£m)||169||-4||562||-1||2,853||1|
|Business equipment finance (£m)||113||-40||398||-33||2,140||-12|
|Car finance (£m)||152||-84||1,407||-54||8,289||-16|
|Aircraft, ships and rolling stock finance (£m)||24||-63||71||-64||491||10|
|Direct finance (£m)||517||-64||2,735||-43||14,371||-13|
|Broker-introduced finance (£m)||237||-62||1,017||-45||5,941||-11|
|Sales finance (£m)||336||-59||1,556||-42||8,415||-11|
|Finance leasing (£m)||174||-46||704||-41||3,827||-15|
|Operating leasing (£m)||138||-76||942||-52||5,957||-15|
|Lease/Hire purchase (£m)||698||-60||3,122||-44||16,631||-13|
|Other finance (£m)||164||-37||673||-25||3,415||6|