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Leasing Around the World

Leasing Around the World - New Business 2016

As we know already from the “History of Leasing” – leasing is an ancient financial service, which today is popular throughout the world. The information on the development of leasing around the globe and the study of various local best practices will give us knowledge about the future development of leasing in the developed and the not-so-developed markets.

We gather data about the size of the various leasing markets, but here we will try to provide some information on the specifics of each one of them … or at least – the leading ones.

The Leading Leasing Markets

The new leasing business in 2015 was just over 1 trillion dollars. In 2016 it increased by 9,40% and reached 1,1 trillion dollars. Here are the main contributors to this huge market:

Leasing Around the World - New Business 2016

USA

The USA is the leading leasing market in the world for many years. The new leasing business in  2016 reached USD 383.9 billion, with growth slowing down to 2,54% y/y.

China

The second largest leasing market is that of China, although this is a recent development. It marked a remarkable growth in the last few years, with new business increasing only in 2016 by some 61,90%, reaching USD 206 billion. Leasing is now considered an important financial instrument in China.

United Kingdom

The UK takes the fourth place in the global ranking of the new leasing business. Despite the uncertainties of BREXIT, the new leasing business in 2016 reached USD 81.77 billion, marking an 8,98% growth from the previous year.

As the leading European market with well-established tax traditions, the leasing market in the UK has branded with a different name almost all the variations of the leasing transactions. Here are a few examples and their Bulgarian analogs: “Contract Hire” in reality is operational leasing of vehicles by corporate clients. Should the lessee be a physical person, the transaction will be “Personal Contract Hire” or PCH. If the lessees wish to have the option to purchase the car at the end of the leasing term, the service will be called “Contract Purchase”. The standard leasing terms are between 18 and 48 months, with 36 months being the most popular. These transactions are similar to the “Open-end financial leasing” contracts in Bulgaria. The „Closed-end financial leasing contract“ also has its specific name – “Hire Purchase” or НР. One may find also financial leasing on the island, next to all the above variations. The difference of the UK “Financial Leasing” compared with “Hire Purchase” is that the capital allowances are used by the lessor under the former, while these are used by the lessee under the latter.

The main association providing data on the leasing market in the UK is Finance and Leasing Association /FLA/, which reports on about 95% of the leasing market.

Germany

Germany occupies the fourth place in the new leasing business ranking for 2016. The growth of new business in Germany in 2016 is 3,42% y/y and has reached USD 64.3 billion.

The German market is one of the most mature leasing markets in the world. 74% of it were dominated by the leasing of cars and heavy vehicles in 2016.

Japan

New leasing business in Japan slowed down in 2016 by 1,30%. However it remains the second largest leasing market in Asia, following China.

Europe

Sixth in the global new leasing business ranking is France with USD 38.9 billion and a growth of  11,23% y/y.

Ninth is the ranking of Italy with new business of USD 25.3 billion.

Tenth is Sweden with new business of USD 20.1 billion.

The total market share of the global new leasing business is 31.5% in 2016. The European market is dominated by the UK and Germany which together form some 42% of the European market or 13% of the global market.

The information on leasing is most comprehensive and easily available in Europe. Care for this rest in Leaseurope – the association in which most European leasing associations participate.

Asia

Asia is the third continent ranked by the size of the new leasing business with a share of 26,40% of the global market and the astonishing 30% growth rate in 2016.

The third largest Asian market is that of Korea, which is 13-th in the world with new leasing business in 2016 being USD 10.8 billion.

Australia

The Australian leasing market is mature and as with all Australian things – specific. The products “chattel mortgage” and “novated lease” originate and are quite popular in Australia. The new leasing business in Australia reached USD 28.44 billion in 2016. Together with New Zealand they are responsible for 2,6% of the global leasing new business.

South America

The new leasing business in South America shrunk in 2016 by 6,8%. The continent has a 1,2% share of the global new leasing business. Leading national markets in the region are Columbia, Peru, Argentina, Brazil and Chile.

Africa

This is the continent with the most weakly developed leasing industry. There is information from only four countries about the new leasing business – South Africa, Nigeria, Morocco and Egypt. The total new business volume for 2016 is USD 5.4 billion, which marks a 0,5% share of the global market.

Bulgaria

Bulgaria ranks on 41st place in the new leasing business global ranking with USD 0.94 billion marking a 9% annual growth.