Polish Leasing Association, representing the Polish leasing sector, announced that in 2021 leasing companies provided total financing of PLN 88 billion (approx. EUR 19.5 billion). This result is 30.7% higher than in the previous year and significantly exceeds the expectations of lessors. Companies associated with the PLA focus on servicing leasing transactions, the value of which amounted to PLN 77.2 billion (approx. EUR 17.6 billion). Loan agreements are concluded less frequently (PLN 10.8 billion (approx. EUR 2.4 billion) in 2021).
“The results of the leasing sector in 2021 are really good. With PLN 88 billion (approx. EUR 19.5 billion) in new financing, we can speak of another record, despite the serious turbulence experienced by the automotive sector. In the second half of 2021, we faced the limited availability of new cars, and experts indicate that this situation may continue in the coming months of this year. Therefore, we assume and adopt a cautious development scenario for the leasing sector in 2022. A difficult year ahead of the leasing industry, in which the performance of leasing companies will depend on the availability of financed assets” – notes Paweł Pach, Chairman of the Council of Polish Leasing Association.
In 2021, with the help of leasing and investment loans, entrepreneurs most often financed light vehicles (44.6% in the leasing market structure) as well as machines and other equipment (28.1%). As the latest PLA report shows, the structure of the market has changed over the last year. The financing of +3.5 t heavy goods vehicles, tractors, semi-trailers, trailers, and buses (22% share) was gained at the expense of light vehicles (light vehicles had a 47.5% share in 2020). Other assets such as IT equipment, planes, ships, rolling stock, and other vehicles account for 4.4% market share, while real estate – less than 1%.
The total value of the active portfolio of the leasing industry at the end of 2021 amounted to PLN 165.8 billion (approx. EUR 36.9 billion), which means a nearly 5% increase y/y. For the first time, the portfolio of active lease contracts in the area of financing movable property was higher than the balance of loans granted to companies by banks (PLN 160.6 billion (approx. EUR 35.7 billion) is the portfolio of the leasing industry in the area of financing movable property, and PLN 159 billion (approx. EUR 35.3 billion) was the value of active loans).
The structure of the portfolio of leasing companies’ customers has remained stable for a long time:
- The recipients of leasing services are mainly micro and small companies, i.e. customers with a turnover of up to PLN 20 million (appox. EUR 4.4 million), which account for 73.7% of the customer structure.
- The largest group of customers (54.1%) are micro-companies (customers with a turnover of up to PLN 5 million (approx. EUR 1.1 million)).
- Customers with a turnover of PLN 5-20 million (approx. EUR 1.1-4.4 million) constitute 19.6%.
- 25.4% of companies with a turnover of more than PLN 20 million (approx. EUR 4.4 million) have a share in the structure, while transactions concluded with individual clients account for 0.7% market share.
Trends in groups
Light vehicles (passenger cars and vans up to 3.5 tons)
2021 was marked by a limited supply of new cars on the market, which was caused by problems with the supply of semiconductors. Due to empty squares and months of waiting, monthly sales of new cars began to decline in the second half of the year. During the pandemic, semiconductor manufacturers shifted to supply to industries with growing demand after the demand for semiconductors in the automotive sector declined sharply, which resulted in a reduction in car production at factories in the US and Europe. Ultimately, the automotive market recorded only a 6.7% increase in new car registrations compared to the pandemic 2020.
Despite these unfavorable factors, the leasing industry-financed light vehicles (i.e. passenger cars and vans up to 3.5 tons) with a total value of PLN 39.2 billion (approx. EUR 8.7 billion), which is a result 22.9% higher than in the previous year. Both types of vehicles, i.e. passenger and delivery vehicles up to 3.5 tons, recorded high dynamics (23% y/y and 22.6% y/y, respectively).
The industry’s results in the area of car financing were influenced by the economic environment, which last year was a factor strongly supporting the development of financing for passenger cars as well as delivery and heavy goods vehicles up to 3.5 tons. The Polish economy grew by 5.7% in 2021, and the main growth factor was consumer spending with a dynamics of 6.2%. The stable situation in the labor market was conducive to a solid rebound in consumption.
Lessors follow the trends by offering to finance for “green assets”. As the analyzes of the Polish Automotive Industry Association show, in 2021 leasing companies CFM and RAC financed a total of 8,194 electric vehicles (BEV + PHEV), which means an increase of 130% y/y. As you can see, it was a segment that, despite supply problems, showed great dynamics. Over the last year, the share of lessors in the registration of electricians among institutional buyers increased to 59.3%. The factor that will have a significant impact on the demand for electric cars will be the implementation of the “My Electrician” program, i.e. the program of subsidies for electric cars. Today, 12 leasing companies and CFM support the implementation of this program.
Machines and other devices
In 2021, the economic situation in the enterprise sector was mainly influenced by the high liquidity of companies and the use of production capacity. Disruptions in supply chains were an important factor disturbing the functioning of companies from most industries. The greatest concerns of enterprises were the increases in prices and costs, the most acute since the transformation. Companies operating in industry, construction, and transport felt the most severely, and the least – in services.
The above-mentioned factors had a large impact on the financing of machinery and equipment in 2021 in leasing companies. This segment was characterized by dynamic development and allowed for the financing of machinery and equipment with a total value of PLN 24.7 billion (approx. EUR 5.5 billion) with a 26% y/y growth rate. The highest dynamics were achieved in the financing of machines for the production of plastics and metal processing (+35.5%), construction machines (+32%), as well as machines for the food sector (27.7%), and agriculture (+18.3%).
“When analyzing the situation in the agricultural sector, one cannot ignore the record sales and high registration level of new agricultural tractors (43% increase in registrations y/y, and their number exceeded 14 thousand). Polish producers, importers, and distributors, through proper order management, coped with these challenges better than companies in Western Europe, where the markets did not record such high growth. Such good machine sales results translated into the results of leasing companies, which financed agricultural machines worth PLN 6.4 billion (approx. EUR 1.4 billion), i.e. 18.3% more y/y. “ – said Tomasz Sudaj, President of Polish Leasing Association.
The lessors’ reach also includes the renewable energy industry (photovoltaics). The Institute for Renewable Energy estimates that at the end of the year, the installed PV capacity in Poland may exceed 7 GW – 6.3 GW at the end of September – an increase of 100% y/y. Leasing companies in 2021 financed 6,279 photovoltaic installations with a total value of PLN 662.5 million (approx. EUR 147.2 million). This is the PLA information on a portion of the market.
Heavy goods vehicles
The truck market in Poland has one of the greatest dynamics in Europe. In terms of sales volume, it is already the third market, and the results of leasing companies are strongly related to the results of vehicle registration.
2021 was a record high for lessor truck financing. In this market segment, where the PLA took into account such assets as heavy goods vehicles over 3.5 tons, tractors, semi-trailers and trailers, as well as buses, positive dynamics were visible in all product groups, except for buses. Accumulated the PLA data at the end of 2021 show that the leasing industry signed new contracts with a total value of PLN 19.4 billion (approx. EUR 4.3 billion), with the dynamics of the truck segment at +63.3% y/y.
Low-emission and zero-emission vehicles are becoming more and more popular among users as well as among companies ordering transport services, recommending the transition to ecological solutions. Leasing companies adapt to market needs and offer the possibility of financing this type of vehicle. A study by the PLA shows that leasing companies in 2021 financed 833 heavy vehicles (including tractor units, buses) powered by gas (LNG/CNG) and electricity, with a total value of PLN 672.1 million ((approx. EUR 149.5 million) the PLA data on part of the leasing market).
“The transport market will be affected by turbulence in terms of deliveries or a significant increase in vehicle prices. We estimate that in the last dozen or so months the car fleet at factory prices (EUR) has increased by about 15-20%, without taking into account the impact on the final purchase costs of a significantly higher EUR exchange rate than in recent years. In addition, there are limited opportunities in the supply of new vehicles, as well as the entry into force (in February 2022) of changes resulting from the mobility package, which will translate into an increase in the costs of drivers’ remuneration and a reduction in cabotage. Another factor that may have a significant impact is the increased fiscal burden on transport companies resulting from the provisions of the New Deal. Many smaller carriers and drivers provide services to larger shipping companies on a B2B basis as part of sole proprietorships” – said Tomasz Sudaj.
What do leasing companies say about the next months of the year?
According to the quarterly survey of the economic situation in the leasing industry, carried out among people responsible for sales in leasing companies associated with the PLA, the surveyed companies expect employment growth in the first quarter of 2022, even higher than in the previous quarter. They also forecast a further deterioration in the quality of the portfolio, but on a smaller scale than in the fourth quarter of 2021.
On the other hand, the companies announce a significant reduction in sales activity at the beginning of 2022. Both the ratings for the forecasted number of incoming applications and the value of concluded contracts are formulated at a significantly lower level than in the fourth quarter of 2021.
The surveyed companies differently assess the possibilities of increasing the level of financing for individual groups of fixed assets. Clear increases in financing are expected for light vehicles as well as for machinery and IT financing. On the other hand, the prospects for further development are less positive for the financing of heavy transport and the real estate sector.
What is the ZPL forecast at the end of 2022?
In 2022 the dynamics of the leasing industry at the level of 10.3% will be in line with the forecasted increase in private investments and the economic development scenario in Poland. This year, the leasing industry can provide total financing of PLN 97 billion (approx. EUR 21.6 billion).
Source: Press release by Polish Leasing Association from February 15, 2022