Financial Leasing Services Market Expected to Reach $624.3 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Financial Leasing Services Market, By Type (Capital Lease, Operating Lease, and Others), By Provider (Banks and Non-Banks), and By Application (Transportation, Aviation, IT and Telecom, Manufacturing, Healthcare, Construction, and Others): Global Opportunity Analysis and Industry Forecast, 2022-2032". The financial leasing services market was valued at $214.9 billion in 2022, and is estimated to reach $624.3 billion by 2032, growing at a CAGR of 11.5% from 2023 to 2032.

Financial leasing means a financing transaction in which the lessor enters into a written agreement with the lessee which grants the lessee the right to possession and use a leased asset for the specified period of time in return for the payment of the defined installments by the lessee, with or without an option to purchase. Furthermore, many companies opt for leasing rather than standard borrowing because it offers them an opportunity to replace the moveable capital equipment, they use in their workplace without depleting their equity capital. Furthermore, many companies opt for leasing rather than standard borrowing because it offers them an opportunity to replace the moveable capital equipment they use in their workplace without reducing their equity capital.

Capital efficiency provided by financial leasing is one of the primary drivers of the financial leasing services market. Furthermore, the flexibility and customization offered by financial lease of operational lease are significant drivers behind the rapid growth of the financial leasing services market. In the current dynamic business landscape, companies increasingly demand tailored financial solutions that can adapt to their unique needs. Financial leasing offers the ability to craft lease agreements to suit specific requirements. In addition, tax benefits and favorable accounting treatment promote the growth of the financial leasing services market. Many regions offer tax advantages to businesses that opt for financial leasing over outright asset purchase. This can manifest as deductions on lease payments, effectively reducing the overall tax liability.

However, the various web of regulations and standards governing financial leasing, and economic uncertainty hamper the growth of the financial leasing services market. On the contrary, the increase in demand for digital transformation is expected to provide lucrative growth opportunities to the financial leasing services market trends in the upcoming years. The integration of innovative technologies such as the Internet of Things (IoT), AI, and blockchain has reshaped the landscape of financial leasing.

On the basis of type, the operating lease segment acquired a major financial leasing services market share in 2022. This is attributed to the flexibility and cost-effectiveness that make operating leases an attractive option, especially in industries where rapid technological advancements or changes in needs are common. However, the capital lease segment is the fastest-growing segment during the forecast period. This is attributed to factors such as businesses seeking to acquire expensive assets without a large upfront payment, the desire to show ownership of assets on financial statements, and potential tax benefits.

On the basis of region, North America dominated the financial leasing services market in 2022. The stable economic environment of this region, characterized by strong consumer demand and a change in business landscape, has fueled the demand for financial leasing services in North America. Furthermore, the significant presence of the world's largest banks, financial institutions, and leasing companies in the region drives the financial leasing services market growth. However, Asia-Pacific is considered to be the fastest-growing region during the forecast period, owing to the economic expansion of this region, increase in asset demand, and supportive regulatory environments that have collectively fostered the adoption of leasing across diverse sectors.

The COVID-19 pandemic significantly disrupted the financial leasing services market size, leading to a complex web of challenges and opportunities. Leasing companies faced high risks as economic uncertainty and lockdown measures impacted borrowers' ability to meet lease obligations. This resulted in increased failures and defaults, prompting lessors to reassess their risk management strategies and strengthen underwriting standards. Furthermore, the decreased demand for certain types of assets, such as commercial real estate and transportation equipment, compelled leasing firms to diversify their portfolios to mitigate sector-specific vulnerabilities.     

Key Findings of the Study

• On the basis of type, the operating lease segment accounted for the highest market share, in terms of revenue in 2022.
• On the basis of provider, the banks segment attained the highest market share in 2022.
• On the basis of region, North America generated the highest revenue in 2022.  

The key players operating in the financial leasing services market analysis include Bank of America Corporation, General Motors Financial Company, Inc., Fifth Third Bank, Crest Capital, Minsheng Financial Leasing, BNP Paribas Leasing Solutions, Wells Fargo, CMB Financial Leasing Co., Ltd., BOC Aviation, and Sumitomo Mitsui Finance and Leasing Co., Ltd. These players have adopted various strategies to increase their market penetration and strengthen their position in the financial leasing services industry.