Asset Finance Continues to Grow Despite Uncertainty
It might be hard to believe but, in the midst of the turmoil around the UK’s exit from the European Union, there are positive signs in the FLA’s most recent set of statistics on asset finance volumes.
The newly published figures show growth of 4% for the twelve months to the end of January 2019 against the same period last year, and the rolling three-months to the end of January show a 6% year-on-year change. But perhaps the most encouraging figure is for the month of January itself; this saw asset finance volumes grow by 9% over January 2018.
It’s when you look behind the headline figures at the variations across asset categories, sales channels and finance types that you begin to learn more.
The variance in performance across asset types is marked. Looking at the three months to the end of January, Plant & Machinery and Commercial Vehicles saw the strongest growth with uplifts on 2018 figures of 21% and 14% respectively.
Other asset categories saw more modest expansion, with IT Equipment at 5%, Business Equipment at 6% and Cars at 4%. Interestingly, January itself saw IT Equipment growth jump to 16%, this is a category that is expected to perform well throughout the year.
There is also a considerable gap between the performance of direct and broker sales channels. The 12 months to the end of January saw intermediary-introduced business grow by 13%, while in-house sales channels were only able to achieve a 3% expansion in volumes. This reflects the current industry trend for downsizing internal sales operations and developing relationships with a network of intermediary partners.
Across all reporting periods in the latest FLA figures, Hire & Lease Purchase out-performs other financial products. This is most striking in the figures for January 2019, where Hire & Lease Purchase grew by 23% on January 2018 figures.
One potential explanation for this is the new £1m per annum Annual Investment Allowance that came into force on 1st January, for which these financial products are eligible. Whether this was a matter of businesses postponing asset acquisitions from the previous year, or an indication of the effectiveness of the new AIA limits in encouraging business investment, will become clear as 2019 progresses.
The full FLA report can be found here.