The Alta Group’s sixth annual report on equipment leasing in Latin America, ‘The Alta Group LAR 100’, shows the region’s leasing industry grew significantly in 2009 despite the global economic downturn. Rafael Castillo-Triana, managing principal of Alta’s Latin American region (LAR), said the industry expanded by an estimated 25.3%, or 19.7% when adjusted for exchange rate fluctuations.
“This growth is remarkable given the 1.9% decrease in the region’s gross domestic product [GDP] that was reported by the United Nations Economic Commission for Latin America,” Castillo-Triana said.
However, the report also identifies troubling trends affecting the industry.
“Despite positive overall gains, the Latin American leasing industry is facing many challenges to its continued growth and survival,” Castillo-Triana explained. “One is the global economic crisis, which has decreased demand for capital goods, the availability of funding, and the development of resources.
“Second is the region’s extreme tendency to give banks preferential treatment over captives and independents, which is creating great concern about the future of the industry. Additionally, there are some worrisome economies in the region, in particular those of Venezuela, Argentina, Bolivia, and Ecuador,” he added.
The Alta LAR 100 reports that the Dominican Republic experienced the strongest leasing growth (48%) in 2009, followed by Mexico at 32%. Brazil, which has the region’s largest leasing industry, increased its regional market share to 67.8%. Leasing in Chile, Colombia, Peru, and Bolivia also expanded.
Argentina’s numbers declined 23% due to its reluctance to report information in addition to actual reductions in leasing portfolios, the report noted. Ecuador’s leasing industry decreased by more than 25% in 2009 while the economy reported 0.4% growth. Venezuela, Puerto Rico, and, especially, Central American countries also experienced retraction. The report attributes Central America’s vulnerability to several factors, including its dependence on exports and remittances with the US.
Other findings include:
- In 2009, the presence of multinational leasing companies declined in most Latin American countries, however, new multinational players emerged in Brazil.
- Bank-owned lessors consolidated power.
- A vendor financing boom continues in the region.
- Delinquency rates were lower than in 2008.
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