“We’re going to start to challenge some of the assumptions that have been made about leasing and similar products, with the aim of ensuring that the economic contribution of the industry is made crystal clear.”
– Derek Soper, Leasing Foundation Chairman
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.
The report of the first phase is available at http://leasingfoundation.org/6q11
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 percent 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 and 50 percent.
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 organisations whose activities do not appear in current statistics, including extremely large organisations 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.”
The report Redefining the Leasing Industry summarises key findings from the 20 interviews, covering issues such as the role of age in perceptions of leasing, trade body representation and regulation and views on the impact of new accounting rules”.
“Although there is a lot more to understand, we think this pilot study is a good start in redefining the leasing industry” says Soper. “We’re going to start to challenge some of the assumptions that have been made about leasing and similar products, with the aim of ensuring that the economic contribution of the industry is made crystal clear.”