Executive Summary

Investment in equipment (vehicles, ships and aircraft, plant and machinery) increased by over 6% during 1994, to reach £48.5bn at current prices. At 1990 prices, the increase was of the order of 8.3%. In 1994, the members of the Finance & Leasing Association (FLA), which is estimated by independent research to account for around 95% of the asset finance market by value, contributed £14.6bn in leasing and hire purchase finance. This gave the members of the FLA a 30.2% share of the investment in equipment in 1994.

Including land and buildings, leasing by members of the FLA amounted to £7.7bn on the declining trend which started in 1991. On the other hand, they contributed £7.1bn in hire-purchase, which has been growing since 1992. The increase for 1994 in relation to 1993 was 31.6%. However, the total value of the leased assets owned by the members of the FLA declined by 10.7% to £47bn, in 1994. For the same year, rentals from leasing declined by 20.3% to £5.7bn and the receivables from hire-purchase increased by 16.7% to £4.5bn, in relation to 1993. However, total receivables declined by 7.3%.

According to official statistics, there were 3,204 enterprises involved in `industrial and office machinery leasing' and 891 in `office furniture leasing' during 1994.

On the basis of the type of product, leasing declined in 1994; that is, except for cars, which increased by 7.3%, ships by 30.6% and railway rolling stock by 67.6%. In so far as primary periods are concerned, the trend is towards the short term, with 70% of the leases for 5 years or less. On the other hand, hire-purchase increased in 1994 for all products with the exception of aircraft and ships.

On the basis of the type of customers, total financing increased for all sectors with the exception of `other manufacturing' and `transport and communications'. Lease financing increased for all customer sectors with the exception of `energy and water supply, other manufacturing and transport and communications, banking, finance and insurance, and central and local government'. In so far as hire-purchase is concerned, there were increases in all customer sectors, with the exception of `transport and communications'.

Looking to the future of the industry, it is likely that investments would increase by 3% to 4% annually over the next 3 or 4 years. Leasing and hire-purchase should increase, but it is unlikely to exceed 5% annually on average for the next 3 years.

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