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Pent-Up Demand Waiting to be Unleashed in U.S. Leasing Market, White Clarke

October 16, 2014, 06:00 AM
Filed Under: Industry News

A recent article by White Clarke Group's Brendan Gleeson "Pent-Up Demand Waiting to be Unleashed in U.S. Leasing Market" outlines how the U.S. may at last be pulling out of recession, but there are still headwinds, not least of which emanate from Washington, DC, as the seemingly intractable gridlock in Congress is doing nothing to reduce uncertainty in the domestic markets.

Excerpts from the Article:

The equipment and auto finance and leasing industry in the U.S. also suffered a decline in relative terms in early 2014, but, like the economy, has picked up since and is registering about 4% growth in new business volume (NBV) year-on-year over 2013 so far, according to the Equipment Leasing and Finance Association (ELFA), and this trend is expected to continue. ELFA research shows that equipment finance NBV grew a healthy 9%-plus in 2013; however, that rate is down on the previous two years.

A real highlight has been the auto sector, which has accelerated through this year with total light-vehicle sales reaching consistent levels not seen since before the credit crunch. Concerns have been raised regarding the possibility of a sub-prime bubble being inflated similar to the mortgage bubble that ushered in the financial crisis, but the auto market does not bear close comparison with real estate. Leasing is playing an increasingly important role in auto finance. The upward trend over the last five years has continued impressively in 2014, with leasing now accounting for over 30% of all new vehicles financed.

Banks are increasing market share in equipment leasing, as they appreciate the value provided by leasing in recent years. There is a question regarding the risk of market commoditization, and where innovation can occur. However, experts interviewed for the country survey expect few such problems and are confident that the market has ample room for expansion.

The equipment finance market in the U.S. may be the world’s largest and most developed, but it is part of the largest global economy, and if the entire market of goods that could be financed is taken into consideration, there is an awful long way to go before equipment finance runs out of road.

Opportunities are currently seen in transportation, construction and technology – all three of which are indicators of a growing economy. A longer-term prospect is the renewable energy market, which has been boosted by government subsidies that may or may not survive a congressional realignment, but the whole domestic energy sector has been transformed in recent times and offers financing opportunities for cost-effective alternative energy solutions.

What the market needs as much as anything is confidence, particularly concerning federal legislation or the preferred lack of it, the result of which will be a return to consistent investment. The undeniable fact is that the US remains a very good place to do business.

To download White Clarke Group Country Reports, click here.

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