Poised for growth when epidemic recedes

Buoyed by a relatively limited economic decline since the start of the pandemic and a highly digitalised client base, leasing professionals believe Sweden, Denmark and Norway are well placed to return to growth as the upheavals from Covid-19 fade into the distance, writes Paul Golden.

While the pandemic has dominated the news agenda across the world for most of this year, there has been particular interest in how one Scandinavian country in particular, Sweden, has gone about containing the virus with an approach based more on recommendations and social responsibility than legal obligations and how this has affected the economy.

In June 2020, the International Monetary Fund (IMF) noted that the country’s less restrictive containment strategy may have resulted in a milder economic contraction at the onset of the crisis while acknowledging that uncertainty remained about its implications for the rest of the year and beyond.

The rationale for choosing this less restrictive approach was the view that the pandemic would last a long time and that measures needed to be socially and economically sustainable, while at the same time keeping infection rates at a level that the Swedish health system could handle.

It appears that Sweden’s approach may have moderated the economic impact at the onset of the crisis, as indicated by the small increase in GDP for the first quarter of 2020 in contrast to the declines experienced by other advanced economies.

Consumption declined at a lower rate in Sweden than in other countries and exports temporarily increased. To put this in context, Denmark and Norway both experienced a drop of approximately 2% in GDP during the first three months of this year.

So how has the region’s lease sector been affected by these developments?

Christina Åhlander, Association of Norwegian FH

Fabrice Perret, BNP Paribas Leasing Solutions


Unfortunately, Finansbolagens Förening (Association of Swedish Finance Houses) had not responded to our request for commentary and market data by the time we went to press.

The most recent official data available for the Swedish lease market indicates that it was worth SEK248bn for 2019, the third consecutive year the market had recorded a fall in value. The Finansbolagens Förening data suggests banks slightly increased their market share last year.

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However, Christina Åhlander, managing director of Finansieringsselskapenes Forening (Association of Norwegian Finance Houses) observes that 2019 was a good year for her member companies.

Lease financing of new business assets and cars was up by 5.9% to NOK68.5bn. Business leasing of cars and commercial vehicles rose 17% and leasing of other assets increased by 7.3%.

Provisional figures from Statistics Norway show that business investment in commercial vehicles, machinery and equipment totalled NOK166bn in 2019, up from NOK 155bn in 2018.

“Our member companies lease financed around 30% of these investments and command a strong position as a source of finance for the business sector,” says Åhlander.

Consumer leasing of cars fell by one fifth, which can be at least partly explained by lower car sales volumes and an increase in the market share of electric cars (which are less likely to be leased).

Åhlander notes that the VAT exemption for electric cars is subject to approval by the EFTA Surveillance Authority (ESA). “The current exemption is valid until the end of 2020 and the Norwegian authorities have begun a dialogue with ESA on a continuation of the exemption,” she says.

Zero-emission cars increased their market share from 31.2% in 2018 to 42.4% in 2019, while sales of hybrid cars slipped from 29% to 25.9%. Meanwhile, diesel cars’ share of new registrations has plummeted from 75.7% in 2011 to 16% in 2019.

In Q2 of 2020, the Norwegian government put in place a number of measures to enable businesses to stay afloat during the pandemic. Guaranteed loans, cash payments and a variety of compensation schemes have been viewed as important measures to help businesses avoid bankruptcy.

Åhlander explains that during the first nine months of this year the lease sector has recorded a 10% reduction in lease financing of new business assets compared to the same period last year. “The major drop came in the third quarter,” she adds.

There have been few defaults and bankruptcies so far, although a possible new shutdown may prove challenging.

The reduction in the volume of car leasing was 20% over the first three quarters of this year – new car sales are down 13.8% but the figures for car leasing are also affected by changes in the association’s membership base.

“New car sales have fallen, but sales of new motorhomes, boats and motorcycles have been strong and used car sales are higher than in the same period in 2019,” explains Åhlander. “The ratio of new car sales to used car sales does not have the same correlation as before as used cars with internal combustion engines are still attractive. Used electric cars with short-range are less popular. Due to the downturn, some customers have needed extensions or payment deferrals.”

A survey from Statistics Norway found that Norwegian industrial managers reported a further downturn in total production volume in the third quarter of the year. There are fewer new orders and major uncertainty related to the pandemic.

“The general outlook for the fourth quarter of 2020 is characterised by pessimism among the majority of the industry leaders, but to a lesser extent than in the previous quarter,” says Åhlander.


Christian Brandt, chief executive at Finans og Leasing (the Danish leasing association) says his members’ leasing assets – worth approximately DKK90bn – are distributed as follows:

  • Trucks/vans: 36%
  • Personal vehicles: 24%
  • Agricultural/industrial equipment: 22 %
  • Office (including real estate): 18%

“So far, the coronavirus situation has had limited impact on our members,” says Brandt. “Many employees are working from home, but businesswise it hasn’t had an impact yet as far as we can tell.

In terms of trends we see a convergence of short-term rent and leasing as more companies opt for ‘mini-leases’

He notes that leasing companies in Denmark have been granted access to the public tax system/register, which was previously available to car loan companies. “This is something that we have pushed very hard for. In return, leasing companies will now have to do a creditworthiness assessment, but this is a good thing. Some public authorities were against this for a long time, due to GDPR concerns, but now it has become a reality.”

He is optimistic about the lease market’s prospects in 2021 while accepting that changes to vehicle taxation could have a major impact on the market. “We are waiting for new taxation rules,” says Brandt. “The emphasis will be on hybrids and plug-ins and the new regulation will be very important in Denmark, since we have a 150% tax on cars.”

Jakob Hansson, who is responsible for corporate leasing and factoring at SEB’s corporate and private customers division, says that following a dip in the market caused by the outbreak of the pandemic the market picked up again during the summer and business levels have returned to close to normal, especially from the second half of September onwards.

credit: mehdi33300/ 

When asked how lease companies in Scandinavia have reacted to the problems caused by coronavirus, he notes that client service and sales distribution have of course been less physical and leaned more towards remote and digital contacts.

“There is an indication of a higher level of repeat sales on established client bases than would normally be the case, which might indicate that the market has tended to stick closer to established business contacts,” adds Hansson.

Aside from coronavirus, he describes growing interest in discussing sustainable financing and pay-per-use solutions as the most significant developments in the Scandinavian lease market over the last 18 months.

“The leasing market is opening up for new sectors when leasing companies continue to develop their products in line with new customer behaviours – for example, digital and self-service solutions,” says Hansson.

More and more individuals and corporates are interested in using rather than owning their assets.

In the long run, this trend will help the leasing market expand into new sectors or sectors where its presence has historically been limited.”

SEB has undertaken a variety of initiatives to encourage growth in leasing activity in Scandinavia, such as focusing on the development of digital and self-service solutions as well as sustainable products and setting up solutions for customer financing.

“We are preparing for a stronger leasing year in 2021 than in 2020, but this is, of course, depends on how the pandemic develops,” says Hansson.

The leasing market in Scandinavia is generally solid and healthy and is served by strong partners, mainly linked to local banks. It is a very competitive market because of many years of development and leasing as a source of financing is sufficiently well-known that lease companies no longer need to convince customers of its benefits.

That is the view of Fabrice Perret, head of the Nordics region for BNP Paribas Leasing Solutions, who refers to a stable increase in the number of leasing contracts over the last 18 months.

“Trends such as pay per use, leasing with added services and as-a-service solutions make it all the more convenient,” he says. “These trends will require leasing companies to adapt our service offerings to be able to propose more comprehensive and usage-based solutions to our clients and partners. In fact, we have been working on developing these solutions in close cooperation with our network of international vendor partners, some of whom we have partnerships with for more than 30 years.”

Perret refers to an increase in demand for digital services across the region. “We have been working on digitalising our processes and the user journey from end to end by launching tools such as electronic signature and client portals that allow clients to work in an autonomous and efficient manner,” he explains.

This industry-wide digitalisation has also led to strong demand for financing solutions for technological equipment that has extended into even relatively traditional sectors.

From a coronavirus perspective, he accepts that the market is yet to see the economic impact when the support packages introduced by the various governments come to an end.

I believe that the industry stepped up and provided individual solutions for those customers in need of cash due to temporary setbacks even before the governments introduced their crisis packages

“What helped the industry a lot during this time was the fact that the market was already very well digitalised, allowing the leasing companies to continue supporting their clients despite the distancing required.”

The hospitality sector has been hit one of the hardest due to the lockdowns, while event management businesses have also suffered. The head of the Nordics region for BNP Paribas Leasing Solutions says some of its vendor partners in the construction business are suffering due to uncertainty in the market, low stocks and delayed projects.

“On the other hand, due to widespread homeworking IT businesses have seen their activity shoot up, as is the case for the companies supplying medical equipment for testing,” he says. “In addition, we can also see that the agricultural market is resisting quite well in terms of payment behaviour and new investments.”

On the question of what BNP Paribas Leasing Solutions is doing to encourage growth in leasing activity in Scandinavia, Perret observes that as a newcomer in a very competitive market supported by international vendor cooperation agreements, it is supporting the dealer networks with knowledge, tools and solutions to help them in the selling phase.

My outlook for the lease market in 2021 is that the market will develop steadily as it has done over the past number of years,

“Naturally we haven’t seen the long term effects of coronavirus on business and our daily lives, but the Scandinavian countries usually have strong economies and a solid safety net for society provided by the governments.”

The region has also had a lower impact from the crisis compared to other European countries, he adds. “We are newcomers in Scandinavia and have to find our place in the process of supporting our vendor partners, but we believe strongly in our concept.”

Ranked 11th, 17th & 20th in the world

According to the White Clarke Global Leasing Report 2020, which ranks countries by leasing volume, Sweden was ranked 11th, Denmark 17th and Norway 20th (compared to Germany 4th, the UK 3rd and France6th).

Citing figures for 2018, White Clarke Group reported that total new leasing business in Sweden was $22.88bn (with growth down 19.61% on the previous year); Denmark was $11.49bn (growth up 0.97%); Norway was $8.57bn (growth up 5.31%). White Clarke sourced its figures from Leaseurope. Source: White Clarke Global Leasing Report 2020