After years of record growth, a new report released today projects a negative growth of minus ten per cent for the European leasing market in 2009. The study also warns that the number of Europe's leasing providers will shrink by 30 per cent in five years as it adapts to the slowing liquidity, lack of investment, and cost of fund issues common in the current financial markets. Global management consultancy Arthur D. Little has analysed Europe's top 15 leasing finance companies, and along with ranking their market share, offers predictions as to how consolidation, corporate restructuring, and increased global competition will affect these main players and the industry as a whole over the next five years. In its latest report, "Survival of the Fittest", Arthur D. Little offers guidance as to how leasing providers can survive the current recession and the following period of predicted widespread industry consolidation.
Who are the current winners?
Within the report, Arthur D. Little names UniCredit Group of Italy as Europe's leading leasing company. Overall, the UK, Germany, France and Italy have the continent's strongest leasing markets, each with three players represented in the top 15. However, as market conditions remain tumultuous in each of these countries, if the leading companies are to remain on top they must recognize and adopt a diverse approach to driving business both at home and through expansion into foreign markets. "As global financial services corporations face tough decisions in their bids to survive the recession, many of their leasing assets are finding new homes with foreign players," said Dr. Gerrit Seidel, Managing Director and Global Head of the Financial Services Practice at Arthur D. Little. "AIG is a prime example of such a parent company, which through its high-rating can, despite current conditions, still make an attractive offer auctioning off its aircraft leasing unit abroad. A well-established corporate standing is crucial for any company to succeed abroad, and yet in the current climate, reputations are crumbling, meaning innovative business models and creativity are necessary to avoid being left behind." Lean leasing for profitable growth
The report highlights the necessity for the leasing industry to move toward a model of cost-effectiveness as its number one priority. Top performers in the industry hold a cost/income ratio of far below 50 per cent, and in order to survive the tough years ahead, players currently lagging behind must aim to achieve similar cost effectiveness. To make this shift in corporate culture, companies must practice what Arthur D. Little refers to as 'lean leasing'. This addresses four key areas:
- Ensure the product portfolio is robust, and offers are the most profitable for today's market conditions
- Adopt a holistic view of managing risk and performance - knowledge sharing technologies and processes that break down corporate "silos" allow for more flexible growth
- New distribution strategies can open up your customer base - align products with key distribution partners to develop compelling market positioning
- Revisit IT resources to ensure efficiency - Arthur D. Little found that the use of appropriate IT systems can reduce average transaction costs by up to 40 per cent
Notes for EditorsAbout Arthur D. Little
Arthur D. Little (ADL), founded in 1886, is a leading global management consulting firm that links strategy, innovation and technology to master complex business challenges while delivering sustainable results to our clients. Arthur D. Little has a collaborative client engagement style, exceptional people and a firm-wide commitment to quality and integrity. ADL is proud to serve many of the Fortune 100 companies globally in addition to many other leading firms and public sector organizations.
Further InformationGerrit Seidel
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