As the impact of the coronavirus deepens across Europe, the Acquis Index will be published on a monthly basis to share visibility of the trends we are witnessing in equipment leasing, and assist in monitoring developments in the wider leasing industry as the economy is unlocked and the industry begins to recover.
As an independent insurance administrator working in partnership with over 90 leasing companies across 13 European countries, Acquis has been providing specialist insurance programmes for equipment leasing for over a decade, and during the course of this time our management data has proved to be a reliable early indicator of changes in new business volumes across the leasing industry.
Acquis’ volumes are predominantly made up of small ticket equipment with an average ticket size of €12,000. 58% of the volumes are made up of computer / office equipment, 15% retail and 12% manufacturing, with the remainder consisting of construction, material handling, medical and other.
It won’t be any surprise to learn that due to the coronavirus crisis and the social and economic lockdowns experienced across Europe, lease originations have fallen significantly in the last month. During April we saw inception volumes fall to 45% of 2020’s Q1 average, with the trend line declining through the month. As expected, we have seen the biggest impact on restaurant equipment which has been hit particularly hard as restaurants were amongst the first businesses to be closed at the beginning of lockdowns; lease inceptions for restaurant equipment fell to 18% of their first quarter volumes during April. While computer equipment has fared much better, managing to maintain 57% of Q1’s volumes, potentially a result of businesses investing in the infrastructure required to support home working.
The outlook for May continues this downward trend with anticipated volumes falling to around 30% of Q1 volumes. While this shows the significant short term impact of the Covid-19 crisis, the story varies regionally as we see certain areas of Europe adopt different policies to lockdown restrictions. Countries like the Netherlands, home of Acquis’ European headquarters, are faring slightly better achieving 49% of “pre-Covid” volumes in April compared to 39% in France.
Acquis’ Chief Commercial Officer, James Rudolf, comments, “The immediate impact of the Covid-19 crisis reflected in these figures won’t be surprising to anyone in the industry. While we don’t know exactly how long the impact will last, nor whether there will be a V-shaped bounce back or a longer term U-shaped dip, we do know that leasing is well positioned to play its part in the economic recovery. Traditional leasing products remain very attractive both from a risk perspective, where funders are financing a real asset with value, as well as a customer perspective, with leasing taking the pressure off working capital and improving cash flow. Thanks to the strength and depth of our European client base we are already witnessing certain sections of the European market begin their journeys to recovery.”