New Report Examines Impact of Brexit on Finance and Leasing

Fleet Logistics Newsletter August 2016

A new report that looks at the possible impact of Brexit on the European leasing and asset finance sector finds opportunities as well as problems.

The Europe Asset Finance Survey 2016 by White Clarke Group offers the first overview ever of views by major European lessors on the impact of Brexit since the vote was taken on June 23.

The report, which includes the views of some of Europe’s largest international leasing companies, agrees on one point: Brexit is not a crisis on the scale of the 2008 global financial meltdown.

Although the UK leaving the EU is likely to have some short-term negative effects, it is still unclear whether these will result in long-term negatives, says the report.

That depends, in large part, on how the exit itself will be negotiated. Until that process comes into focus – and that might not be until 2019 – things will remain uncertain.

And that uncertainty itself is something that business in general, and the leasing industry in particular, will have to get used to for the time being. It will impact business confidence and the willingness to invest, says the report.

“It is clear that some of the fiscal benefits put forth by the ‘Leave’ camp might not be realistic,” said Bill Stephenson, CEO of De Lage Landen Financial – a view echoed by many other leading industry voices within the report, who feel that Brexit will add to the negative economic climate.

However, there may be benefits according to one expert. “Leasing may benefit in times of uncertainty as it clearly confines the risks of lessees to very clear negotiated obligations: identified assets, clear return conditions, agreed-upon payments and payment moments – all contribute to transparency for the lessee,” says lease business and accounting expert, Henk Uunk.

When the UK leaves the EU, Germany will have the EU’s largest leasing market. But, says Horst Fittler, managing director of German Leasing Association BDL, Brexit will cause uncertainty for German companies.

“In 2015, Germany exported €90 billion into the UK. And the UK is an important export market for the German car industry.

“However, due to Brexit, numerous uncertainties will make it difficult for German companies to do business with the UK. They will wait and see what type of economic relationship the UK will arrange with the rest of Europe.

“We fear that general investment willingness in Germany, which is already low, will decline with the UK’s decision to quit the EU.”

However, on a more hopeful note, he says: “German leasing companies with business in the UK usually have their own branches there and support their British customers on-site, in which case the UK’s decision may have less of a direct impact.”

The report includes the views of a number of leasing and financial experts on the possible impact of Brexit of European leasing and asset finance and other issues, including:

Horst Fittler, managing director of the German Leasing Association (BDL)
Paul Gogolinski, CEO, Total Fleet Solutions Poland
Morten Guldhaug, executive vice president, DNB Finans, and Leaseurope Board member
Gábor Lévai, general secretary, Hungarian Leasing Association
Galina Maier, managing director, Raiffeisen Leasing Russia
Jürgen Mossakowski, CEO, CHG-MERIDIAN Group
Martin Starck, chairman of the Management Board, LBBW Leasing and Leaseurope Board member
Bill Stephenson, CEO and chairman of the executive board of DLL
Henk Uunk, lease business and accounting expert

Elsewhere in the report, Vahid Daemi, LeasePlan Corporation CEO, gives his views on market trends and opportunities for auto and fleet finance providers.

“The vehicle leasing industry continues to be shaped by a number of key trends that include market consolidation, competitive pricing and increased regulation. Areas with strong growth opportunities in the coming year include the SME segment, which is an important, fast-growing segment, as well as private leasing,” he says.

“The benefits of leasing over car ownership are becoming increasingly apparent to individuals requiring a vehicle. This segment will continue to develop in the coming years.

“The mobility landscape is changing and will influence the traditional fleet management offering. Across the globe, the sharing economy and environmental awareness are encouraging people to explore alternatives to vehicle ownership. Fleet managers across the world will need to become more agile to meet employees’ changing mobility needs,” he concludes.

Other key findings of the survey include:

Leasing markets in Europe, as measured by the latest Leaseurope Index, show an encouraging trend across all the performance indicators.
On an annual basis, all the indicators improved compared with 2014, indicating a much more positive trend overall for the industry after some lackluster years.
The figures revealed in the Leaseurope Index for Q1 2016 are that key indicators remain strong.
The latest European Business Confidence Survey reveals overall optimistic expectations for European leasing in the first half of 2016.
A profile of Leon Dhaene, new director general of Leaseurope and Eurofinas.

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To download your free copy of the survey, please click here

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