Fleet News

Leasing business static despite VAT changes

THE August 1, 1995 VAT changes had little or no effect on the company car leasing market as business volumes remained virtually static according to new figures from the Finance and Leasing Association.

The total value of cars financed by FLA members during 1995 rose only 3% over 1994 levels - from £6,081 million to £6,284 million - compared with an increase of more than 20% in the previous year. There were also significant falls in Government spending on cars (down 31% by value) and throughout the manufacturing sector (down 28%).

In its third annual survey of the state of the UK's finance and leasing market, the FLA polled 109 members who account for around 96% of asset finance and leasing. The overall picture was one of declining investment - especially in the public and manufacturing sectors, with total investment failing to reach 1990 levels. The survey said 1995's relatively flat performance could be attributed to cost-cutting measures or might suggest the sharp upturn in 1994 was a result of the release of pent-up demand following the deferral of replacement cycles during the last recession.

According to early indications, levels of motor finance activity crept up again during April and were also looking healthy in the first half of May, but the FLA concluded it was too early to predict any trends for the rest of the year.

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