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### ######################## #######################\ The Equipment Leasing Association just released
its State of the Industry Report. In case you are wondering how
certain financial industries are doing in relation to the overall
economy, leasing is consistent with the current environment! The
survey shows that the 2002 estimate for leases is $204 billion out of $655
billion in total new business equipment investment. That figure is
down from $216 billion in equipment leases on $700 billion in new business
equipment investment for 2001. The projection for new equipment investment
in 2003 is slightly improved at $668 billion, of which
$208 billion will be leased. ### ###################### ##################### State of the Industry Report Shows Equipment
Leasing Consistent With Overall Economy Slow Economy Causing Leasing Businesses to Create
Greater Efficiencies for Future Profitability Arlington, Virginia-The Equipment Leasing and
Finance Foundation, a non-profit organization dedicated
to enhancing recognition and understanding of equipment lease financing,
has released its 2002 State Of The Industry Report (SOI). The SOI
report shows that while the overall economy has affected the equipment leasing
industry, renewed industry emphasis on leasing basics is creating
the groundwork for profitability during future economic recovery.
"The key factor affecting 2002 leasing
performance is the economic recession of the U.S. economy," said Lisa
Levine, Executive Director, Equipment Leasing and Finance Foundation. "However,
the overall view of those interviewed for this report is that this
is a good time to build a leasing business. As one interviewee said, 'August
2003 will be much different.' " Most organizations are using lessons learned
to concentrate on improving credit quality, risk-based pricing and residual
value management. They are also looking to technology, particularly
Web-based solutions and applications systems integration to improve
operational efficiency. Investment in human resources is also a priority,
with companies adopting new recruitment and employee development
programs. Leasing continues to be the most widely used
method of asset-based financing in the U.S., accounting for approximately
one-third of external financing of total capital investment.
Still, leasing volume is in direct relation to business equipment investment.
The 2002 estimate for leases is $204 billion out of $655 billion
in total new business equipment investment. That figure is down from
$216 billion in equipment leases on $700 billion in new business equipment
investment for 2001. The projection for new equipment investment
in 2003 is slightly improved at $668 billion, of which $208 billion will
be leased. Among the report results from the three leasing
market segments - Small Ticket comprising transactions up to $250,000,
Middle Market comprised of transactions from $250,000 to $5,000,000
and Large Ticket for transactions over $5,000,000-are the following: * Small
ticket leasing accounted for approximately 30% of the total volume reported by all survey respondents
with construction, trucking and wholesale/retail among the key
industries served. * In
terms of profitability, small ticket segment average pre-tax income was 20.1% of revenues, higher than that
of the middle market (18.3%) and equal to that of the large ticket
market. * Although
the middle market reported the lowest profitability of the three market segments, it had the highest
return on equity (18.7%) * The
middle market segment had approximately 46% of new business volume coming from computer-related services,
software and hardware, indicating this segment is significantly affected
by technology spending. * Large
ticket leasing accounted for 45% of new business in 2001, but it faces uncertainties caused by potential
IRS rulings; economic difficulties in two key segment industries,
rail and airline; and changes in off-balance sheet financing techniques. The SOI also includes information by categories
of independent, captive and bank-affiliated leasing entities. In particular,
the report cites the emergence of bank lessors as having great
potential to become significant competitors in leasing. Bank lessors'
funding, capital access and cost-sharing advantages could create
greater market concentration than that of competitors. "While we're in a challenging business
climate, leasing equipment organizations are taking this time to position
themselves to take maximum advantage of future growth opportunities,"
said Levine. The SOI contains analysis of industry results,
trends, developments and future outlook for the equipment leasing industry.
It was compiled using information from the Equipment Leasing Association's
(ELA) Survey of Industry Activity, interviews, and independent
economic data. General public wishing a copy of the survey
may visit elaonline.com/library to download the pdf file.
For more information on the leasing industry,
visit ELA online at http://www.elaonline.com or check out ELA's
informational portal for financial decision-makers at http://www.leaseassistant.org.
About The Equipment Leasing and Finance Foundation The Equipment Leasing and Finance Foundation
is a 501c3 non-profit organization established in 1989 by the Equipment
Leasing Association of America (http://www.elaonline.com). The Foundation
develops and promotes the body of knowledge to enhance recognition
and understanding of equipment lease financing. The Foundation's
strategic objectives are to maximize the role that equipment leasing plays
in the world economy, and to be the prime developer and disseminator of
a body of knowledge of the leasing industry. Visit the Foundation online
at http://www.leasefoundation.org. ### #### ################################################## --------------------------------------------------------------------------------- Story
originally released on 11/13/02 |
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