KN71019 KEY NOTE EQUIPMENT LEASING AUGUST 1999

ISBN 1-85765-470-6

GO TO LATEST EDITION

Executive Summary

Table of Contents

Back to Renting Index

EXECUTIVE SUMMARY

Between 1994 and 1998, the leasing equipment market increased in value by 43.4 percent from £15.53bn to an estimated £22.27bn. Owners of the assets (lessors) buy a variety of equipment which they rent to the users (lessees) over the period of the contract.
There are two basic types of lease -- finance lease and operating lease. They are determined primarily by the type and cost of the equipment and the time it takes for full repayment. Other factors which affect the terms for lessees are the cost of acquiring the leased assets, their rate of depreciation and expectations regarding residual values, which are more important for some assets than others.
Most of the equipment leased in the UK is based on machinery and industrial equipment; commercial road transport vehicles and cars; computers, business machines and office furniture; ships; aircraft; and railway rolling stock. Real estate is also a heavily leased asset, but is excluded from this report as it is not considered to be equipment.
The leasing of assets is popular with all types of industrial and commercial businesses, institutions and other organisations, as payments can be spread over the short, medium or long term. However, recent changes to tax regulations have reduced tax allowances on the depreciation of assets. This has severely reduced the attraction of finance leases for lessors who acquire long-life assets. Few leasing companies want to switch to operating leases for the long-term customer who requires large capital assets, because of the cost implications, but they will lose out on the recovery of capital allowances if they persist with finance leases. A variety of alternative options may be tried to resolve the dilemma, but whether they are successful will depend on the interpretations put on these efforts by the tax authorities.
Owing to its potentially low profitability and the greater financial risk for the lessor, the future of the finance lease is relatively poor. It is likely that the market for big ticket leasing will show much slower growth in future. If the traditional finance lease is allowed to diminish in importance, it will need to be replaced by another form of instalment credit. Undoubtedly, the leasing industry will devise a formula to overcome the changes in tax allowances and accounting standards that affect the industry, but the growth rates of past years are unlikely to be repeated in the near future.
Key Note forecasts that the value of leasing business will increase by 27.9 percent between 1999 and 2003, to reach £29.92bn. It is assumed that the UK will continue to lead Europe in consumer asset finance, which is unaffected by finance leasing and accounts for around 40 percent of the total market. In addition, the huge increase in railway rolling stock leasing will help compensate for parts of the business that are potentially vulnerable to the changes in accounting regulations and tax laws.

Back to Top

TABLE OF CONTENTS

Executive Summary

Market Definition

DEFINITION OF A LEASE

TYPES OF LEASE

MARKET POSITION

MARKET TRENDS

Table 1: Gross Domestic Fixed Capital Formation (GDFCF) and Business Investment at Constant 1995 Prices (£m and percent), 1990-1998

Table 2: Investment in Equipment at Constant 1995 Prices (£m), 1990-1998

Market Size

THE TOTAL MARKET

BY MARKET SECTOR

Table 3: Estimated Market Size for AssetsÅ in the UK at Current Prices (£m), 1994-1998

Table 4: Gross Domestic Fixed Capital Formation (GDFCF), Business Investment and FLA Asset Finance at Current Prices (£m), 1994-1998

Table 5: New Assets Finance by Sector (£m and percent), 1997 and 1998

Industry Background

HISTORICAL BACKGROUND

THE LEASING INDUSTRY

NUMBER OF ENTERPRISES RENTING EQUIPMENT

TRADE ASSOCIATIONS

Table 6: Number of Enterprises Renting Equipment by Sector by Turnover Size, 1998

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS

ADVERTISING

Table 7: Selected Leading Leasing Finance Companies by Turnover (£m), 1996/1998

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

UK LEASING

EUROPEAN LEASING

Table 8: Leading European Leasing Companies - Growth in Business Volume by Value ($m), 1996 and 1997

Table 9: Portfolio Growth of Leading European Leasing Companies by Value ($m), 1996 and 1997

Outside Suppliers to the Industry

INTRODUCTION

TYPE OF ASSETS ACQUIRED

Current Issues

MANUFACTURING INVESTMENT

TRAIN LEASING

FINANCE LEASES

PAN-EUROPEAN LEASING

PUBLIC SECTOR LEASING

CORPORATE DEVELOPMENTS

Forecasts

BACKGROUND TO THE FORECASTS

EXPENDITURE ON NEW ASSETS

FORECASTS 1999 TO 2003

Table 10: Forecasts for Gross Domestic Fixed Capital Formation (GDFCF), Business Investment and New Assets Finance at Constant 1999 Prices (£m), 1999-2003

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HOPPENSTEDT BONNIER INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1999 Key Note

Back to Top

Back To REPORTFINDER HOME PAGE

Ariadne - working together with our customers to enhance productivity and increase knowledge

© 2000 www.the-list.co.uk Ariadne

Last updated by Jacob van Eldik 29th January 2000