Top equipment purchasing trends predicted for 2016

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Updated Jan 14, 2016

The Equipment Leasing and Financing Association (ELFA) has released its Top 10 Equipment Acquisition Trends for 2016, and several appear to be locks to impact the heavy-duty aftermarket.

ELFA says U.S. businesses, nonprofits and government agencies are expected to “spend over $1.6 trillion in capital goods or fixed business investment (including software) this year, financing a majority of those assets, these trends impact a significant portion of the U.S. economy. Businesses will find opportunities for equipment investment as solid market conditions and an improving U.S. economy prevail over global headwinds and potential policy changes.”

ELFA lists its top 10 trends as follows:

  • U.S. investment in equipment and software will hit a new high, but moderate in growth as businesses hold back on spending.
  • End of zero interest rate policy will spur other businesses, particularly small businesses, to invest before rates go higher.
  • The growth of equipment acquired through financing will increase solidly, but more slowly.
  • Businesses will begin preparing for new lease accounting rules.
  • China’s economic woes will be a global concern.
  • Equipment investment will vary widely by industry vertical.
  • Customer demand for greater flexibility and convenience will increase the use of non-standard financing agreements.
  • Low oil prices will continue to impede energy investment.
  • Eyes will be on 2016 presidential election for potential policy shifts.
  • Looming “wild cards” could influence business investment decisions.

Knowing what we know about this industry I’d say the first two trends will almost certainty have an impact. Adoption of high-tech equipment and software grows exponentially in the aftermarket each year, and if interest rates are nearing a spike, now is a great to make investments in your business before the economic climate shifts.

China’s woes could impact the aftermarket as well if its struggles limit the amount of raw materials North American suppliers can purchase from the People’s Republic. And if other nations are be forced to pick up the production slack, its safe to assume their increased output will also be joined by increased prices.

Low oil prices should continue impacting our industry as well. New truck orders took a hit in 2015, and if oil prices stay low more fleets and owner-operators could continue to retain their current power units — there will be minimal incentive to upgrade for fuel economy benefits — extending the national fleet and pushing more trucks out of warranty and into the aftermarket.

Then there’s No. 9. I don’t have to tell you that the election could make an impact.

What do you think? Which of these is most likely to impact your business, and/or the aftermarket as a whole?

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