Looking ahead, the Great Recession recovery will put the equipment finance industry at a crossroads, says Peter Bullen, senior vice president of Key Equipment Finance, in the latest issue of the National Equipment Finance Association's Newsline magazine.
Lower energy prices will spur more capital equipment spending in sectors like specialty vehicles. On the flip side, general manufacturing equipment financing activity is expected to slow because of ties to energy sector, says Bullen, who was among top industry executives sharing overall expectations about the equipment leasing and finance industry for 2016.
Bullen's insights into 2016 include:
- Increasing consumer disposable income from lower energy prices will help propel the economy, but this will be counterbalanced by slowing capital expenditures for companies with ties to oil.
- While pricing is important, relationships will continue to matter most to those financing capital expenditures.
- Industries benefiting from low energy prices or increased consumer disposable income will be actively replacing equipment. These include transportation, retail, restaurants, and chemicals.
- An imbalance between supply of capital and demand for capital continues to cause yields to drop.
Key Equipment Finance anticipates continued growth in its vendor and lender finance businesses, Bullen said, while the direct originations channel will continue to expand with the addition of First Niagara.
"2016 will be very exciting!" Bullen added.