The Vehicle Leasing Finance Survey, examines the changes in funding options available to leasing companies over the last three years. It assesses the various factors that are important to leasing companies with finance suppliers, and it looks at their levels of satisfaction. The April 2010 survey highlights a dramatic drop in the number of UK funders providing facilities, even since October 2009, and a corresponding fall in the percentage of leasing companies using each of the remaining funders.
Back in November 2009, over 100 delegates attended the first Vehicle & Leasing Finance Conference, held at Lancaster Gate, London; an initiative from the Vehicle Leasing and major Fleet Advisory Forum. The conference was organised in response to a ‘dramatically changed financial climate’. A line up of both industry and financial experts addressed the various key funding concerns facing the fleet leasing industry. The central theme which emerged from the event reinforced the message to fleet operators of adopting new and efficient management, communication and funding strategies, seen as vital to adjusting to an altered economic landscape.
A focus of attention were the published results of the Vehicle Leasing Finance survey carried out in October by automotive manufacturing and leasing research consultants, ExpertEye who are well known as the creators of the FleetEye survey.
As keynote speakers, ExpertEye, referring to the economic shift, pointed to the diminished number of finance players actively funding leasing companies, having declined from 19 in 2006 to only 10 providers over three years.
The April 2010 report, taken from an online survey of around 50 leasing company directors in the UK, shows this number has further reduced to just eight – less than half the number of active funders from three years ago – some of whom were lending to even fewer operators. Of the remaining providers, lending had, in some instances, fallen by between seven and eight per cent.
Rick Yarrow, founder of experteye says: “Some new funders are showing themselves in the market place but in general funding is still significantly short of demand. Some of the survey findings do need further investigation by those bodies that are active in the market looking for funding options.”
The new report found little change with the facilities provided by funders in the six months since since last October. Back-to-back funding was unchanged with 18 per cent of funders providing it – rates were down from 6.7 per cent to 5.8 per cent. The Undisclosed Agency Agreement figure was only slightly up from 25 to 27 percent with rates hardly changed from 7.3 to 7.0 per cent. Tellingly, the provision of Wholesale Line of Finance has shrunk by nearly two thirds, from 39 per cent three years ago to 14 per cent today.
The April survey shows a more or less across-the-board decrease in the strength of feeling to nearly all factors previously deemed as important by the leasing companies. This includes the issue of availability of credit which was the biggest concern in 2009. “What was initially confusing but has since be explained and confirmed as just acceptance of the current status, is the apparent improvement in satisfaction with Competitive Rates and Availability of funds since our last survey. This is clearly not the case and proves how deep the funding issue has effected the lessors outlook,” says Yarrow.
Perhaps unsurprisingly, competitive rates and realistic additional fees have become even more important to the leasing companies. “The competitive rates are the real issue,” confirms Yarrow, “and the feeling is that the gap between the independent leasing companies and those that are self-funded is getting larger, and is damaging the competitive nature of our sector.
“On a positive note, Underwriting and Speed of Decision making are less of a concern and leasing companies are genuinely more satisfied due to a realisation and acknowledgement that stronger controls in the release of funds were required,” concludes Yarrow.
More detail behind the survey figures is available to download from the Vehicle Leasing and Major Fleet Advisory forum at www.vehicleleasingfinance.com
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