Asset finance falls by 7%

New figures released by the Finance & Leasing Association (FLA) show that total asset finance new business (primarily leasing and hire purchase) fell in August 2024 by 7% compared with the same month in 2023.  In the eight months to August 2024, new business was 4% higher than in the same period in 2023.

New business in the commercial vehicle finance and IT equipment finance sectors increased in August by 5% and 9% respectively, compared with the same month in 2023.  The business new car finance sector reported a fall in new business of 23% over the same period.

Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said “A slowdown in fleet new car sales fed through to a weaker performance by the business new car finance sector in August.  Demand for plant and machinery and business equipment finance remained subdued which reflected weak business investment in these assets.

“The FLA’s Q3 2024 Industry Outlook Survey suggested that asset finance providers are cautiously optimistic about the outlook as a lower interest rate environment should provide a boost to investment intentions. More than three-quarters of asset finance respondents to the Q3 Survey expected some increase in business investment over the next twelve months, while 89% anticipated some increase in new business.

“In Q2 2024, FLA members financed 34% of UK investment in vehicles, machinery and equipment and the industry will play a vital role in supporting the Government’s drive to increase business investment levels. With the Budget fast approaching, we urge the Government to ensure that leasing is included in the full expensing regime.”