BY C A R L C H R A P PA W HAT ARE THE HOT TEST EQUIPMENT SECTORS IN 2015? Th e answer is construction equipment, trucks/ trailers and rail, according to a new survey of ELFA member asset managers and consultants. Carloads increased sharply, by 3.4% for the year—the most in six years—with all major categories showing increases, while intermodal shipments broke the record. Th e market for most car types is good, especially box cars, grain cars, plastic pellet cars and tank cars. New design standards to be issued by the Federal Railroad Administration around May could adversely aff ect the high hazard material tank car fl eet and could lead to many scrappings. M ACHINE TOOLS fi nished in fourth place, with an increase in preference from last year. Th is ranking is believed to be linked to the strong domestic automotive and allied industries, among other factors. Sales in the primary market for metal cutting and forming equipment increased by a robust 3.1% in 2014; total consumption levels are now nearing the peak years of the mid-1990’s. Th e secondary market for machine tools remains strong since dramatically improving from 2010. M EDICAL EQUIPMENT rounds out the top fi ve for the The 2015 “What’s Hot/What’s Not” Equipment Leas-ing Trends Survey, which reveals industry perceptions of 15 equipment markets, indicates that equipment managers and leasing companies remain optimistic with some of their equipment outlooks, yet decidedly pessimistic in others. No-tably, construction equipment ranked No. 1 for the second year in a row, while last year’s No. 2 fi nisher, oil/gas/energy, plummeted to 13th place. Th is fi nish seems to refl ect pes-simism in the oil patch due to the worldwide plunge in oil prices, which has negatively aff ected the values of oil/gas pro-duction and exploration equipment and operating cash fl ows. Overall, it is clear from the comments received that the big-gest threat to the secondary market this year appears to come mainly from the health of global and domestic economies. Th e following are the top 5 equipment types from the survey: C ONSTRUCTION EQUIPMENT was the big winner of the survey for the second year in a row. Construction equipment also ranked No. 1 in residual value increase. Th e outlook for construction remains pinned to the health of the economy and low interest rates. T RUCKS / TRAILERS tied for second place with rail, repeat-ing its second-place fi nish from last year. New truck sales increased by 19% last year and are expected to remain high this year. New trailer orders increased by a stunning 50% last year and enter 2015 with a huge backlog. Sales of used trucks and trailers are good, with very high resale values. Also, fl eet failures ended the year at record low levels. Th is sector will be greatly aided by low fuel prices. R AIL tied for second place with second year in a row, aft er fi nishing in fi rst place for the pre-vious eight years. Th is fi nish is believed to be mainly caused by the unknowns associated with the Aff ordable Care Act. Th is industry has a preference for leased equipment, which continues unabated. However, the Aff ordable Care Act has taken its toll on this sector, along with various potential DRA reimbursement cuts and rules aimed at the industry, weak-ening the new equipment market while, at the same time, potentially making some used equipment more desirable View the results for all 15 equipment categories on the ELFA website at www.elfaonline.org/Data/?fa=Trends . n Carl Chrappa is Senior Managing Director/Asset Management Practice Leader of the Independent Equipment Company, an Alta Group, LLC company and author of the 2015 “What’s Hot/What’s Not” Equipment Leasing Trends Survey. an increase in preference from last year. Th is is believed to be linked to improving economics. Construction rules, oil/gas/energy plummets ISTOCK Equipment Outlook 2015 32 MARCH/APRIL 2015 EQUIPMENT LEASING & FINANCE MAGAZINE