2016-03-12 07:33:44
Construction equipment rules, oil/gas/energy plunges
WHAT ARE THE HOTTEST EQUIPMENT SECTORS IN 2016?
The answer is construction, medical and trucks/trailers, according to a new survey of ELFA member asset managers and consultants.
The 2016 “What’s Hot/What’s Not” Equipment Leasing Trends Report, which reveals industry perceptions of 15 equipment markets based on a survey of ELFA members, indicates that equipment managers and leasing companies remain optimistic with some of their equipment outlooks, yet decidedly pessimistic in others.
The study’s author, Carl Chrappa of the Independent Equipment Company, a division of The Alta Group, LLC, notes that this year marks the sixth year in a row of positive survey results. He also reports that the comments received indicate that the biggest threats to the secondary market this year appear to come mainly from interest rates and the health of domestic and global economies.
Here are the top 5 equipment types from the survey:
CONSTRUCTION EQUIPMENT was the big winner for the third year in a row. The outlook for construction remains good, pinned to the continued health of the economy and low interest rates. Prices of used equipment are falling due to 1) brisk sales of replacement equipment in the primary market, leading to increased amounts of used equipment for sale and 2) the strong dollar discouraging exports.
MEDICAL EQUIPMENT finished in second place. This industry has a preference for leased equipment, which continues unabated. However, the Affordable Care Act has taken its toll on this sector, along with various potential DRA reimbursement cuts, rules, etc., aimed at the industry, weakening the new equipment market while, at the same time, potentially making some used equipment more desirable. The medical equipment secondary market is robust, and the refurbished equipment market is forecast to grow sharply during the near term at an estimated 12. 5% compound annual rate.
TRUCKS/TRAILERS finished third. New truck sales increased by 12. 9% last year but are expected to fall this year. New trailer shipments set a new record last year at over 300,000 and enter 2016 with a huge backlog. Sales of used trucks and trailers are good, but resale values are expected to decline this year due to expanding inventories. Thus, there is continued optimism for this equipment type. This sector has greatly been aided by low fuel prices and interest rates.
MACHINE TOOLS finished in fourth place. This ranking is believed to be linked to the strong domestic automotive and allied industries. However, the collapse of the oil exploration segment has adversely affected sales. The secondary market for machine tools is also weakening and prices are now being discounted in both the primary and secondary markets.
HI-TECH/COMPUTERS also finished in fourth place, tied with machine tools. This industry continues to operate on very low margins but has a very large secondary market. In 2015, global PC sales plunged by 10.6%, due to rapid displacement by smartphones and tablets. A growing preference for phablets and wearables could have positive implications for the secondary PC market.
View the results for all 15 equipment categories on the ELFA website at www.elfaonline.org/Research/?fa=Trends.
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