In 2024, the asset finance industry is set to continue its growth trajectory, building upon its remarkable achievement of £38 billion in new business [1] last year. This represents an impressive growth rate of 11% in 2023 [2], a testament to the sector’s resilience and adaptability amid challenges such as high interest rates, inflationary pressures, and geopolitical tensions. The recent announcement of the UK recession means that leasing can provide flexibility for businesses to manage their resources, in order to access critical equipment. Looking ahead, the prospects for 2024 are promising. Factors like the potential decrease in inflation, stabilisation of interest rates, and the establishment of full expensing as a permanent tax allowance create an ideal environment for businesses to increasingly embrace leasing. We are proud to be at the forefront of driving growth and innovation in various sectors, enabling our partners to harness the benefits of leasing. This article will delve into the key growth areas within the asset finance industry, specifically focusing on green technologies, commercial vehicles, and the healthcare sector, to provide you with the insight you need to strategically navigate the year ahead.
Harnessing The Green RevoLution
The UK Government’s commitment to achieving Net Zero by 2050 is poised to usher in an era of substantial advancements throughout 2024. From energy supply to agriculture, construction, offices, and transport, the UK anticipates a significant surge in growth across its commercial and industrial landscapes, all aligned with the objective of fulfilling this ambitious goal.
As we progress towards a Net Zero Carbon future, the needs and expectations of industries will change, posing considerable growth opportunities that can be supported through leasing. In fact, green technology industries are growing four times faster than the rest of UK economy [3]. It’s adoption is more pertinent than ever, proving a crucial matter in the longevity of business success and the climate. Investment trends in solar panels and heat pumps are indicative of this shift. The UK solar power capacity is projected to increase by 500% by 2030 [4]. While the global heat pump market, valued at £59.68 billion in 2022, is forecasted to grow at a Compound Annual Growth Rate of 9.3% by 2030 [5]. These statistics emphasise the growing commitment from businesses and consumers to invest in sustainable technology, as it offers superior long-term investment returns compared to less eco-friendly alternatives.
Further illustrating the potential of sustainable technologies, vertical farming is another area experiencing significant growth. It’s a process that cultivates crops in vertically stacked layers within indoor settings through LED lighting. The global vertical farming market is projected to grow at a Compound Annual Growth Rate of 5.4% by 2026 [6]. This presents an alternative investment opportunity for farmers, which could make them resilient against the fluctuating costs of fertiliser and fuel. Vertical farming practices could also reduce water usage by up to 95% by some estimates [7], saving agriculture businesses a considerable amount in water and energy costs over the medium to long-term.
Richard Heckel, Head of Specialised Technology, comments on our expertise in leasing green technologies:
We’re proud to be on the frontier of financing cutting edge equipment that supports both innovation and sustainability. Our expertise in payment solutions, combined with our partners experience in sustainable technologies, equips us to foster business growth aligned with industry goals for our partners and their customers.”
There is an undeniable growing demand for a range of green assets from LED, Solar panels, Battery, and Energy storage, ECV charging, Small Wind Turbines, and beyond. Leasing is a proven tool to strategically offset upfront costs when investing in green technology assets, and our payment solutions help remove barriers to accessing necessary equipment. We believe a sustainable enterprise is both a requirement and an opportunity, and that leasing has a fundamental role to play in this transition to a low carbon economy.
500% INCREASE
Projected in solar power capacity by 2030.
9.3% CAGR
Expected in global heat pump market by 2023.
5.4% CAGR
Expected in vertical farming by 2026.
Steering Towards the future: Commercial Vehicles
Throughout 2024 the commercial vehicle sector will continue to undergo significant transformation, further shifting towards eco-friendly transportation. This change is marked by a milestone event that is set to occur in February 2024, with the expected addition of the millionth electric vehicle (EV) on UK roads [8]. This follows a remarkable increase in EV uptake, with a 73.8% rise to 2,964 units in December 2023 alone in comparison to the same month in 2022 [9].
This surge in EV adoption is not just a trend but a strategic move for businesses. The benefits of an EV fleet are becoming increasingly apparent, outweighing those of traditional petrol and diesel vehicles. Companies are facing high maintenance costs for non-EV fleets, including fuel expenses and congestion zone charges. In contrast, EVs offer a more cost-effective and environmentally friendly alternative.
The economic benefits of this shift are significant. By 2025, the move to electric cars is predicted to contribute £24 billion to the UK economy [10]. Globally, the EV market is poised for a surge in 2024, driven by decreasing costs, technological advancements, and strong government support.
A pivotal turning point was achieved in the electric vehicle space recently, with 50,000 EV chargers officially installed across the UK [11]. This accomplishment represents a 46% increase in the total number of charging devices since November 2022 [12]. We can expect to witness further growth in the infrastructure of electric vehicle (EV) Chargers, as it seeks to keep pace with the growing number of electric vehicles on the road.
Asset finance is playing a key role in this transition. Businesses are leveraging this approach to modernise their fleets with the latest vehicles and technologies. This shift is crucial for staying competitive and meeting market demands. We have been committed to the commercial vehicles sector for more than 40 years and are expertly positioned to support customers to make the right long-term decisions for their business.
Sales Manager, Scott Barnett believes:
Leasing electric vehicles presents an advantageous opportunity for businesses of all sizes. It’s not just about embracing a greener footprint; it’s also a strategic financial decision. By leasing EVs, companies can benefit from the operational savings on fuel and maintenance, combined with various government incentives, making EV leasing a practical choice.”
RevoLutionising Healthcare
The healthcare landscape in 2024 will continue to evolve rapidly, with increasing pressures on the National Health Service (NHS) accelerating change in how healthcare services are delivered. A notable shift is the migration of NHS patients to private practices, a movement driven by the need to alleviate the strain on public health resources. Recent figures from the 2022 UK Health Accounts, provided by the Office for National Statistics, paint a revealing picture of the current financial landscape in the Healthcare sector. Out of Pocket Expenditure, saw a significant increase of 10.4% over 2022 13. In contrast, Government-financed expenditure on healthcare declined by 1.1% 14. This data supports the trend of medical departments such a as radiology or pathology, which are traditionally managed within the NHS, establishing private practices, with the option of continuing to support NHS patients.
This shift underscores the growing importance of healthcare asset finance, a critical tool enabling public and private healthcare providers to acquire the necessary medical equipment and technology to cater to the needs of their patients.
The landscape of healthcare in 2024 will therefore be marked by significant transformations, driven by evolving patient needs, technological advancements, and financial pressures. We, as a business, are at the forefront of supporting the healthcare sector’s evolution; recognising the growing demand for innovative healthcare treatments and the impact of restricted budgets on patient health. Our commitment was acknowledged at the LeasingWorld Awards 2023 where we were named ‘Top Technology and Medical Funder’. Through tailored services, we support the growth of our partners, including broker and key vendor channels.
Ian Swindell, Head of Healthcare UK, highlights the ways in which leasing aids healthcare’s evolving landscape:
Our focus is on supporting practices through these changes with strategic leasing solutions. Our commitment also extends to integrating finance solutions in emerging markets like Physiotherapy and Aesthetics, as well as we’re supporting a move towards service and software models in healthcare, marking a departure from traditional asset ownership.”
The Future Of Asset Finance
In summary, 2024 presents a huge capacity for leasing to support and drive growth across green technology, commercial vehicles, and healthcare sectors. By offering flexible, strategic financial solutions, asset finance stands as a key enabler for businesses to adapt and thrive in an increasingly dynamic and sustainable economy. The future of asset finance, therefore, is not just about financial transactions but about being an integral part of a broader movement towards economic resilience, environmental sustainability, and enhanced healthcare delivery.
[1] Finance and Leasing Association, https://www.fla.org.uk/research/asset-finance/
[2] Finance and Leasing Association, https://www.fla.org.uk/research/asset-finance/
[3] Green Intelligence, https://www.greenintelligence.org.uk/news/green-industries-growing-four-times-faster-than-the-rest-of-uk-economy/
[4] House Grail, https://housegrail.com/solar-energy-statistics-uk/
[5] Green Match, https://www.greenmatch.co.uk/heat-pumps/statistics
[6] Vertical Farming Planet, https://verticalfarmingplanet.com/vertical-farming-in-the-uk-industry-overview/-
[7] Vertical Farming Planet, https://verticalfarmingplanet.com/vertical-farming-in-the-uk-industry-overview/
[8] Fleet World, https://fleetworld.co.uk/uk-on-course-for-one-million-evs-on-roads-by-february-2024/
[10] Green Fleet, https://greenfleet.net/news/22062020/electric-vehicles-could-benefit-uk-economy-ps24bn-2025
[11] EZ Charger, https://ez-charge.co.uk/2024-what-to-expect-for-ev-charging-in-the-year-ahead/
[13] Office for National Statistics, https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthcaresystem/datasets/healthaccountsreferencetables-
[14] Office for National Statistics, https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthcaresystem/datasets/healthaccountsreferencetables-
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