The global financial leasing market is forecasted to grow at a compound annual growth rate (CAGR) of 7.53% from 2024 to 2031, expanding from USD 225.48 billion in 2023 to USD 403.14 billion by 2031. Key factors fueling this growth include rising demand for high-value equipment and the increasing preference for flexible financing options. Leasing is made more appealing due to favorable tax benefits, which enhance affordability. Technological advancements have streamlined leasing operations, making them more accessible and efficient. Businesses are turning to leasing to maintain operational flexibility and adopt asset-light models that avoid the burden of ownership. Additionally, leasing offers off-balance-sheet advantages that can improve financial ratios and overall balance sheet strength. Ongoing global infrastructure development is further increasing the need for leasing services, positioning leasing as a compelling alternative to traditional financing.
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Understanding Financial Leasing
Financial leasing involves a contractual agreement where the lessee uses assets owned by the lessor in exchange for regular payments. Typically, such arrangements include equipment maintenance, insurance, and the option to purchase the asset. This model allows businesses to access expensive equipment with minimal upfront investment, thereby enhancing cash flow and financial agility. In May 2024, Singapore’s SP Group entered into a USD 1.1 billion deal with CMB Financial Leasing Co. Ltd. of China, via its subsidiary Shirui Energy Technology. The financing will support SP Group’s renewable energy expansion in China.
Increasing Capital Needs Fueling Market Growth
In a competitive global landscape, businesses are investing heavily in capital acquisition to upgrade technology, improve efficiency, and expand into new markets. This growing need is driven by infrastructure development, equipment purchases, and innovation. Favorable financial environments and access to various financing tools have facilitated capital acquisition strategies like leasing, equity financing, and debt instruments. These approaches help businesses stay financially stable and adapt to shifting market demands. For instance, in 2024, Kingsoft Cloud Holdings Ltd. partnered with China Merchants Financial Leasing to invest up to USD 70.17 million in AI infrastructure via a finance lease framework.
Tax Incentives Driving Leasing Preference
Tax advantages are a major driver in the popularity of financial leasing. Lease payments are often tax-deductible, lowering a company’s taxable income and enhancing cash flow. In many regions, lease payments are classified as operational expenses rather than capital expenditures, providing additional financial relief. The ability to claim accelerated depreciation also improves tax efficiency. As companies aim to optimize their tax liabilities while maintaining operational flexibility, these financial benefits make leasing an attractive solution. This is contributing to sustained market growth.
Banks Leading the Market
Banks are expected to hold the largest share in the financial leasing sector due to their strong financial infrastructure, abundant resources, and deep market expertise. With the ability to offer tailored leasing solutions across a range of assets—like vehicles, machinery, and real estate—banks remain an appealing choice for businesses seeking customizable financing. Their extensive client networks and ability to integrate leasing with other services further strengthen their market position. In 2024, Wells Fargo introduced advanced APIs for its commercial clients, enabling real-time financial data access to optimize sales, credit risk, and cost management across multiple industries.
Regional Insights: North America and Asia-Pacific
North America dominates the global financial leasing market due to its mature financial systems, strong economic foundation, and high demand for capital-intensive assets. Companies in the region leverage leasing to enhance liquidity and gain access to cutting-edge technology. Major financial institutions and diversified leasing offerings drive regional growth.
Meanwhile, Asia-Pacific is emerging as a key growth area, fueled by rapid infrastructure development and rising demand in sectors such as transportation, renewable energy, and manufacturing. In 2024, Sumitomo Mitsui Finance and Leasing introduced carbon credit-inclusive leasing options, allowing clients to offset emissions via J-credits during asset usage periods.
Future Market Trends (2024–2031)
- Leasing will become increasingly preferred over ownership due to its flexibility and alignment with dynamic market needs.
- Changes in regulations and tax policies could reshape the market landscape by altering the attractiveness of leasing incentives.
- Digital leasing platforms will gain prominence, improving accessibility and efficiency for businesses of all sizes.
Report Scope
“Financial Leasing Market Assessment, Opportunities, and Forecast, 2017–2031F,” by Markets and Data, presents an extensive analysis of the financial leasing industry, covering market dynamics, challenges, opportunities, and forecasts. It includes data on market size, growth trends, segment insights, and profiles of key players, including their business strategies and market share.
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