Investment Expansion Boosts Leasing SectorValue-added tax increase retards private leasing

According to the results of the latest Ifo Investment Survey of German leasing, the dynamic growth in the leasing sector will continue. Already in 2005 new business increased by 7.3 percent to €50.2 billion, with real-estate leasing having grown by 15.5 percent and product leasing by 6.3 percent. In 2006 the leasing sector profited from the tail wind of sped-up growth of total investments and the recovery in construction. New business will outdo the previous-year result by almost 8 percent, with product leasing (+3.5 percent) and real-estate leasing (+40 percent) both contributing to this growth. In 2006, leasing's share of total investments will increase from 18.6% to 19.1%. In contrast, the product leasing ratio will fall from 24.1% to 23.6% as a result of a decline in private leasing. The rise in VAT scheduled for the beginning of 2007 has induced the financial service providers of automobile manufacturers (autobanks) to offer their customers loans to finance new cars more often than leasing contracts. In 2007 product leasing will receive impulses from the expected increase in plant and equipment investments (nominal ca. +5%). The development of real-estate leasing is nearly impossible to forecast, but positive impulses from increasing investments in non-residential construction can be expected.