Published: October 2012
Price: £795 (Extended licence: £1490)
About this report
In this market report we review the UK truck leasing industry. We quantify the market size and historical growth rates while reviewing key factors behind these figures and exploring drivers of profitability.
We also carry out an in-depth analysis of the drivers of industry growth – in particular relevant economic and market indicators such as levels of manufacturing output, truck parc, road freight moved and leasing penetration. Our analysis of historical trends and forecasts is anchored in this information.
While many reports on the industry contain data and description, a critical objective for us in writing this report has been to prioritise our insights and conclusions.
What are the objectives of this market report?
The UK truck leasing market has been affected by the economic downturn with manufacturing output down and fewer trucks on the road. However, new truck registrations, which decreased sharply in 2009, have now recovered to approach pre-recession levels.
Leasing companies have adapted their business models to reduce costs and exploit incremental sources of revenue.
We believe that, in order for those involved in the market to make the best decisions in this complex and changing environment, they need to have access to the best information and understanding of the trends and drivers. The aim of this report is to provide this.
It is intended for truck leasing companies themselves as well as investors and others considering entering the market, banks, analysts, consultants and other advisors with interests in the sector.
What are the sources and methodology?
This market report is based on
– Publicly available data including company annual reports, websites, press releases and government statistics.
– Interviews with senior-level contacts in the market.
– In-depth analysis of the macroeconomic environment and other relevant market drivers.
Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions
The market involves leasing and renting of HGV’s with a weight over 3.5 tonnes.
Common lease types include:
– Finance lease, under which the customer assumes all the risks and rewards of ownership
– Operational lease, or contract hire, which typically covers maintenance and other costs during the lease period for a pre-determined monthly cost with the leasing company retaining residual-value risk.
Increases in truck size and improvements in utilisation levels mean that, despite significant increases in the volume of goods transported by road, UK truck parc is lower than in 1999.
The benefits of leasing – which include freeing-up capital, tax efficiency and greater predictability of costs – have led to an increase in leasing penetration.
Market growth and drivers
The truck leasing market is now of the order of £2bn in value.
Prior to the onset of recession in 2008, the industry enjoyed a combination of high growth and attractive margins but was impacted by the downturn.
Truck leasing companies responded by reducing staffing levels and hence costs as well as developing their value-added services offerings to increase revenue per contract.
The market is served by three main types of leasing companies:
– Independents, such as Ryder / Hill Hire, BRS, Axis and Dawsongroup, which typically offer trucks from a variety of manufacturers and differentiate themselves on local presence and a high degree of service.
– Captive OEM leasing subsidiaries, such as Iveco Capital, PACCAR (DAF) Financial and Scania, which can provide competitive finance packages incorporating best information on residual values, to help sell the trucks of their parent company.
– Leasing specialists owned by financial institutions, such as Close Asset Finance (part of Close Brothers) which leases and rents trucks via its subsidiary, CVS.
The market leader is Ryder, which recently acquired another leading independent player, Hill Hire. PACCAR / DAF and Scania are the leading captive providers.
The market remains below its 2008 peak but there are reasons for optimism
Forecasts for recovery in GDP and in manufacturing output suggest that demand for transport will increase.
Those in the industry also expect the proportion of trucks which are leased to continue to increase.
However, economic uncertainty clouds the picture with both GDP and manufacturing output forecasts having recently been revised downwards.
Our market forecast incorporates these and other factors to set out how, and why, we believe the market will develop over the next few years.
The UK truck leasing market – 5
Market size and growth – 8
Market size & growth
Performance of leading providers
Market drivers – 10
Discussion of market drivers
Drivers and their impact
Competitive landscape – 18
Profiles of the main competitors
Forecasts – 36
Key drivers forecast
Risks to the forecast
Appendix – 40
List of figures (UK truck leasing market report)
1. Carbon emissions by HGVs / millions of tonnes
2. Market size and growth / £m
3. Truck parc / £’000
4. Maximum DAF truck, by weight (tonnes) lease per month / £
5. Leading operators historical revenue trend and market growth / % annual change
6. UK GDP in current prices (money GDP), inflation (GDP deflator) and real GDP / % annual changes
7. Manufacturing output change / %
8. Total road freight moved change / %
9. New HGV registrations yearly / ‘000
10. New HGV registrations, year to date / ‘000
11. Truck parc / % change
12. Leasing penetration of truck parc / ‘000
13. Historical average fleet age of Volvo trucks / Years
14. UK vehicle renting & leasing industry concentration / % of enterprises with revenue > £5m
15. Leasing companies revenue (most recent year) / % of total market
16. Leading operators pre-tax margin / %
17. Total employee numbers, revenue per employee for leading operators / £’000
18. Pre tax margin (most recent year) / %
19. Revenue per employee for leading operators 2011 / £’000
20. CAGR (2006-11)
21. Ryder Limited summary financials
22. Hill Hire Limited summary financials
23. Dawsongroup Plc. summary financials
24. Fraikin Limited summary financials
25. BRS Limited summary financials
26. Axis Fleet Management summary financials
27. M C Truck Rental Limited summary financials
28. Riverside Truck Rental Limited summary financials
29. Gulliver’s Truck Hire Limited
30. Scania Finance Great Britain Limited summary financials
31. PACCAR Financial Plc. summary financials
32. Iveco Capital Limited summary financials
33. Commercial Vehicles Solutions (CVS) summary financials
34. UK GDP in current prices, inflation (GDP deflator) and real GDP / % annual changes. Historical and forecast
35. Manufacturing output forecast / % change
36. Total truck parc forecast / % change
37. Leasing penetration of truck parc forecast / ‘000
38. Forecast market size and growth / £m