In the initial months of 2025, the asset finance sector experienced a slight uptick compared to the same period last year. According to the Finance & Leasing Association (FLA), total new business in asset finance, encompassing leasing and hire purchase, increased by 1% in February 2025 relative to February 2024. Notably, specific segments like IT equipment finance and plant and machinery finance contributed positively to this growth. Conversely, the commercial vehicle finance sector faced challenges, registering a decline. This report reflects the complexities of economic conditions affecting various industries differently.
The IT equipment finance sector saw a significant rise of 35%, highlighting a growing demand for advanced technology solutions. Simultaneously, the plant and machinery finance sector witnessed a modest 2% increase during the same timeframe. These figures underscore a shift towards investments in efficiency-enhancing technologies, driven by businesses seeking competitive advantages amidst economic uncertainties. In contrast, the commercial vehicle finance segment reported a 3% drop in new business, indicating potential hesitations among fleet operators regarding future expenditures.
Beyond individual sectors, broader trends emerged within the finance leasing landscape. Finance leasing volumes amounted to £190 million, reflecting a notable 20% decrease. However, operating leasing demonstrated resilience with a 4% increase, reaching £762 million. Additionally, lease/hire purchase activity remained stable at £1.56 billion, while other finance solutions surged by 27%, totaling £329 million. These contrasting performances highlight the diverse strategies adopted by businesses across varying market conditions.
Geraldine Kilkelly, FLA's director of research and chief economist, noted that while the asset finance market continued to grow in February, the pace had slowed compared to recent trends. She attributed this deceleration partly to external factors such as tariff increases from the US administration, which have dampened the economic outlook and heightened uncertainties for businesses. Despite these challenges, those continuing to invest are prioritizing efficient technologies, underscoring the crucial role of asset finance providers in facilitating access to necessary capital.
Looking ahead, the modest yet steady growth observed in January and February 2025 suggests a cautiously optimistic trajectory for the asset finance industry. The 2% increase in new business during these months compared to the previous year indicates resilience despite headwinds. Over the preceding 12 months leading up to January 2025, new business was 3% higher than the corresponding period in 2024. As businesses navigate evolving economic landscapes, their reliance on tailored financial solutions will remain pivotal in driving sustainable growth and innovation.