Buckle Up: The Equipment Industry Is Shifting Into Drive

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The news out of the equipment leasing and financing industry is mixed, but a new report indicates encouraging signs are on the road ahead.

The appropriately named Equipment Leasing and Finance Association (ELFA) just released its monthly report for January, and the numbers show an encouraging uptick in business for lessors over a year ago. In all, the volume of new business in the month was $4.2 billion, up an impressive 24 percent from 2010. That’s a good view of the big picture, but not everything is rosy.

Receivables over the course of the month did dip sharply, going down 35 percent from the same period in the previous year. According to ELFA, the total headcount for equipment companies has been all but flat for three months, and was down 4 percent from the previous January.

ELFA’s President William G. Sutton saw reasons to believe the industry is picking up steam as it makes its way through the beginning of the new year.

“After a typical end-of-quarter, end-of-year spike in new business activity, the equipment finance sector seems to be resuming a steady pace of increasing volume. This trend, coupled with a strong outlook by leasing and finance executives about the future of the industry, bodes well for a continued recovery of the sector,” Sutton said.

Richard Henderson, the president of Equipment Engine, said inventory levels are on the rise but the makeup of that inventory is changing. As loss levels wind back down to pre-2008 levels for the asset management side of the house, repossessed inventory is dwindling even as small business-related inventory grows, thanks to what Henderson characterized as those business owners “actively working to monetizing idle assets.”

In general, he said, the market for used commercial equipment appears to be growing steadily.

“We are seeing our inventory turn very quickly as ‘survivors and thrivers’ of the Great Recession begin to expand again. Heavy construction equipment and transportation assets in particular are in very high demand,” Henderson said.

Discuss the state of the industry in the comments section.

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