Businesses are purchasing new equipment and vehicles in record numbers, driven by customers capitalising on strong business conditions, according to new data.
The data – released by National Australia Bank (NAB) – has shown that top equipment purchases by businesses include tractors (up 146 per cent year-on-year), irrigation equipment (up 217 per cent year-on-year), earthmoving/construction equipment (up 133 per cent year-on-year), forklifts (up 216 per cent year-on-year) and coffee machines (up 155 per cent).
Overall, NAB’s data showed that agricultural equipment finance sales were up 130 per cent year-on-year in 2020, which the major bank said demonstrated strength across regional Australia.
The figures also showed that industries like manufacturing have also increased 130 per cent year-on-year.
The major bank said the figures reflect the fact that companies are embracing the “strongest market conditions seen in years”.
“Following 2020 where businesses across the globe were forced to ‘pivot’ their business through the pandemic, this year, Australian businesses are investing to build on the opportunities uncovered,” NAB said.
Commenting on the trends in the equipment and vehicle purchases, NAB executive regional and agribusiness Julie Rynski said that customers have been capitalising on strong business conditions and confidence, while the government’s instant asset write-off scheme had played a key role in stimulating investment.
“When businesses start purchasing equipment, it’s a real signal to us that farmers and regional businesses are in a phase of growth and expansion,” Ms Rynski said.
“With business confidence at an all-time high and businesses building on things they’ve learnt through the pandemic, I’m not surprised that equipment sales are so high. The majority of farmers and regional businesses have proven to be exceptionally resilient through two years of challenging conditions and are now poised to capitalise on new opportunities and brilliant market conditions.”
Ms Rynski said the bank expects current demand for equipment finance lending to continue.
“If we continue to have favourable seasonal conditions, we expect this level of investment in agricultural equipment to continue for the next 15 months,” Ms Rynski said.
Recent research from Prospa showed that one in four small businesses intends to take out a borrowing product in 2021, with 60 per cent of small-business owners in Australia who experienced negative impacts due to the coronavirus pandemic saying that they expect to recover within the next 12 months.
The Reserve Bank of Australia (RBA) recently highlighted the “longstanding challenge” that small-to-medium enterprises (SME) face in accessing finance, with assistant governor (financial markets) Christopher Kent stating that business failures are expected to rise.
He added that the bank’s work and its engagement with industry over the past 30 years had found that there is a consistent theme of small businesses finding it difficult to access finance.
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.
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