ALF Reveals impact of pandemic on the sector in 2020
The Portuguese Leasing, Factoring and Renting Association (ALF) has just published the estimated results for 2020 of the three sectors it represents. Despite the absolutely atypical year, Specialized Financing maintained its weight in the domestic market, continuing to ensure a decisive contribution to the formation of the Portuguese GDP.
In an economic climate of contraction due to the Covid-19 pandemic, Factoring registered a total decrease of 6.9% in 2020, totalizing 31.5 billion Euros in turnover. For the first time in six years, the sector registered a drop in growth, however less than the 7.6% drop in the Portuguese GDP, according to the estimate released by the National Statistics Institute (INE). Thus, it is estimated that in 2020, Factoring will have increased its weight in the national GDP to around 16%.
Domestic Factoring maintained the general trend, decreasing 6.4%, with production values of 15.1 billion euros. On the international side, the drop was 17.7%, totaling 3.9 billion Euros in turnover, of which 3.7 billion Euros in Export Factoring (reduction of 18.4%) and 195 million Euros in Import Factoring (growth of 0.1%).
In Confirming (service in which the institution of Factoring makes the payment to the suppliers of its client, the latter being able to request the anticipation of the value) a decrease of 3.6% of the activity was observed, translating into 12.5 billion euros in turnover.
The results presented by ALF for the Renting sector also reveal a drop in the growth trajectory observed in recent years, revealing a 27.5% reduction in the number of vehicles acquired in 2020, compared to 2019, with a total of 27,115 vehicles acquired in Renting (of which 22,451 correspond to light passenger cars and 4,664 to light commercial vehicles). This decline in the sector is, however, smaller than that seen in the Portuguese automobile market, which should have suffered a loss of 33.9% in 2020 compared to the same period in the previous year.
The slowdown in Renting corresponds to a 26.8% decrease in the annual production value, to 557.3 million Euros, compared to 2019 when it amounted to 761.4 million Euros.
The total size of this sector ended up decreasing only marginally when compared to new production, with the total fleet managed by Renting companies contracting only 2.4% in number of vehicles, totaling 118,805 vehicles, worth 1.91 billion Euros (1.1% less than in the previous year), results to which contributed the extension of contracts which ended in 2020.
In 2020, according to ALF estimates, Leasing supported investments of 2.4 billion euros, with a 22.3% drop in total production compared to 2019.
The smallest drop was observed in Real Estate Finance Leasing, which registered a 12.5% decrease in value, with a production of 740 million Euros - with 90% of the value of these investments being allocated to contracts made by companies or public entities in 2020.
The Equipment and Vehicle Financial Leasing was responsible for 1.6 billion euros in investments, 26.0% less than in 2019. Close to 1.04 billion Euros of the total was invested in vehicle Leasing contracts, which correspond to 33,411 contracts: 795 million Euros were invested in light vehicles (of which 553 million Euros were contracted by companies and 241 million Euros by individuals) and 249 million Euros in heavy vehicles. The remaining 566 million Euros were invested in equipment, corresponding to 8,454 contracts, according to estimated data.
For the President of ALF, Alexandre Santos: "Despite the decreases observed, Specialized Financing has shown to maintain its weight in the Portuguese economy and importance to the business fabric, continuing to make its support available and even reinforcing its importance, as in the case of Factoring which assumes a preponderant weight in relation to the national GDP, and Renting in the automotive mobility sector".
The ALF spokesman also points out: "We are starting 2021 with the hope that the existence of health plans and economic recovery may contribute to some recovery, but nothing will be produced automatically and each one will have to contribute as much as possible to a process of return to economic growth, which will not be free from setbacks. The sectors represented by ALF are responsible for injecting confidence into the market and contributing as agents of positive transformation. Without a recovery of the market we will not achieve objectives such as the renewal of the car fleet with a purpose of reducing CO2 emissions, to which Renting and Leasing have contributed a lot with an increasing number of electric or propelled by alternative energies license plates ".