By far, North America is the world’s equipment largest leasing market which saw volumes increase by 10.7 per cent in 2015, as stated in the White Clarke Report.
Combined, the USA, Canada and Mexico reported new business volumes of US$374 billion which was 15.0 per cent higher than Europe, the second largest region with US$322.8 billion.
The US market has been boosted by the introduction of new financial instruments, which have led the US Equipment Leasing and Finance Foundation to extend its scope beyond pure leasing and hire purchase. This gives more businesses more diverse options to choose and if popularity continues, will help businesses to free up capital. However, with the current political climate, the local economy could change business sentiment and reverse any progress made.
Latin America saw the biggest percentage rise of any global region, recording 28.9 per cent growth in 2015, although the report’s authors noted data from South America can be unreliable.
China’s equipment leasing market, the second largest after the USA at 22.2 per cent of world volume, expanded by 26.0 per cent, despite the Chinese Central Bank cutting interest rates five times through the year, which made loans cheaper and far more attractive.
The Chinese market appears to be maintained by a diversification of funding sources and the Chinese State Council’s introduction in 2015 of policies to support leasing. This could be the reason why China has remained the second largest market in the world for asset finance through leasing and hire purchase despite experiencing the lowest growth in GDP in 25 years.
The composition of China’s market is shifting with the automotive industry becoming a more prominent player. Traditionally, the infrastructure and manufacturing sectors have dominated but now auto finance is beginning to take considerable market share.
Business across Asia as a whole increased by 14.4 per cent. Notably, Japan’s asset finance market is rising after a significant decline of 17.0 per cent in 2014 and has resulted in small and medium-sized enterprises, not large corporates, taking the lead in using alternative capital solutions, for two consecutive years.
Volumes in Australia and New Zealand were flat in local currency terms. The strengthening US dollar meant this translated to a decline when expressed in US dollars, and has moved Australia from sixth to seventh place in world volume rankings. Despite moving down a position in volume rankings, it’s not all bad news. According to the White Clarke Group APAC report, which provides more information on Australia than the Global Asset Report, general equipment finance increased by 2.8 per cent in 2016 compared with 2015, whereas fleet leasing saw a greater increase of 21.4 per cent over the same period.
In this year’s global report, chattel mortgage – now recognised by White Clarke as a form of hire purchase – has been noted as playing an increasingly important role in equipment finance. This is further good news for the Australian market, particularly as many industry experts predict growth over the next 12 months.