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July 14 , 2014

Current size of leasing industry understated

U.S. – The first phase of the ‘Redefining the Leasing Industry’ study from the Leasing Foundation casts doubt on current estimates of the size of the industry.

Twenty in-depth interviews that crossed the entire spectrum of the industry — from small specialist lessors to large multinational lessors operating in a number of jurisdictions, and included motor specialists, manufacturers,’ captive lessors of a variety of equipment types including commercial vehicles, yellow goods and office and IT equipment, and private equity houses and outsourcers — indicate that ‘leasing’ underlies the products and services of many businesses that are not included in the industry statistics.

The figure anecdotally discussed in the industry is that no more than 20 per cent of assets are financed through leasing-type arrangements, but accurate data is sparse. These qualitative in-depth interviews, all conducted by fellows of the Leasing Foundation, indicate that current statistics may under-report the size of the industry by between 30 per cent and 50 per cent.

Derek Soper, foundation chairman and one of the report’s analysts says, “Although the next phase of the study will explore this in depth, we believe that current statistics seriously under-represent the size of the industry. That’s because there are many organizations whose activities do not appear in current statistics, including extremely large organizations whose products are in fact leasing but are rarely called ‘leases.’ We think that it’s time to redefine leasing to include what are, in reality, leases.”

The research investigated how leasing was seen, what products are similar to leases, and how interviewees looked at hire, rental, managed service contracts and subscription contracts in their businesses.

“What we heard in these interviews was that services are frequently added to and are part of a leasing contract and that that this trend is increasing”, says Soper. “There is a recognition that the financial services landscape is changing and what we thought of as ‘equipment’ now includes services, and frequently, shared infrastructure.”

 

 

 

 

 

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