Total asset finance new business (primarily leasing and hire purchase) fell by 60% in May 2020 compared with the same month in 2019, according to figures released by the Finance & Leasing Association (FLA).
However, the IT equipment finance sector reported a modest fall in new business of 4% in May.
The FLA reported that in the five months to May 2020, asset finance new business fell by 30% compared with the same period in 2019.
New business in the commercial vehicle finance and business new car finance sectors contracted by 62% and 87% respectively, compared with May 2019.
Over the same period, the business equipment finance and plant and machinery finance sectors reported falls in new business of 40% and 44% respectively.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance market reported its lowest level of new business for more than 13 years in May, with the vehicle finance sectors continuing to be hardest hit by the lockdown restrictions.
“The IT equipment finance sector was the only sector to report growth in the first five months of 2020.
“Our latest figures show that the industry provided finance for almost 40% of UK investment in machinery, equipment and purchased software in the year to March 2020.
“If this support for business investment is to continue as well as meeting the huge demand for forbearance, the Government needs to take action to support all lenders, including non-bank lenders, by allowing them to access to funding as suggested in the FLA’s Term Funding Pipeline proposal.”
The FLA is the trade body for the asset, consumer and motor finance sectors in the UK. Its members include banks, subsidiaries of banks and building societies, the finance arms of leading retailers and manufacturing companies, and a range of independent firms.
In 2019, members of the FLA provided £140.3bn of new finance to UK businesses and households, £48bn of which helped consumers and businesses buy new and used cars, including over 91% of private new car registrations.