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Asset Finance Outlook Brightens, U.S. Leasing Reaching New Highs

May 27, 2014, 06:40 AM
Filed Under: Industry News

According to White Clarke Group, the outlook for the asset and auto finance industry worldwide has brightened since the first Global Asset and Auto Finance Survey in 2013, when key players in North America, Europe, Asia Pacific and South America regions were all reporting only limited growth as most were still struggling to deal with the fall-out from the financial crisis.
Updates for Q1 2014 suggest the year ahead will see real improvements, starting in the U.S. where leasing business volumes are reaching new highs. Business volume is also on the increase in Europe, admittedly from low levels in those countries which have been worse affected by the Eurozone crisis, although the situation is more mixed in the Asia Pacific markets. Changes in government in Australia coupled with an economic revival based on a residential property boom have had a dampening effect on the traditional mining services and manufacturing asset finance sectors.
Lenders and the commercial organizations they support have started to see the corporate belt tightening forced on them as a result of the shortage of available credit as a virtue, rather than a limitation. Austerity has brought with it a focus on value for money which, in the immediate short term, translates into opportunities to offer funding for replacement equipment now reaching capacity. Longer term, contributors to the report indicate finance companies are starting to develop innovative approaches to help companies unlock capital tied up in plant and equipment so it can be used for investment. Lenders are also looking at new ways to help companies whose customers increasingly want to pay for services and equipment based on their usage, rather than outright ownership.

However, this innovation comes at a time when the asset and auto finance leasing industry also faces a series of legal and regulatory challenges. Hopes that there would be a resolution to the long debate over a new approach to accounting for leases suffered a set-back in early 2014 when the US and global standards setters failed to reach agreement. National regulations remain a worry for all respondents, but the environment has improved markedly in China, where a sudden change to VAT rules almost brought the asset finance market to a close in 2013. Now, it seems, the government is actively seeking to encourage more leasing activity by creating a more benign regulatory environment.
To download the Global Asset and Auto Finance Survey Q1 2014, click here.

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