CBA figures have revealed a spike in business car financing compared with last year, driven by a 187 per cent rise in light commercial vehicle financing since January 2021.
New asset finance data from the Commonwealth Bank of Australia (CBA) has shown that business car financing has risen by 36 per cent since January 2021, compared with the same period last year.
The rise has been driven by a 187 per cent spike in light commercial vehicles, an 85 per cent rise in utes and vans, and a 50 per cent increase in heavy trucks, the CBA figures showed.
Meanwhile, asset financing for new motor vehicles, including passenger vehicles and sport utility vehicles (SUV) has risen by 36 per cent over the past year, according to the major bank.
It said that its financing data has echoed recently released VFACTS May 2021 industry trends figures from the Federal Chamber of Automotive Industries, which it said showed that vehicle registrations for business use have increased 24 per cent since January 2021, and 48 per cent from April to May 2021.
Commenting on the business car financing figures, CBA’s executive general manager business lending, Clare Morgan, said the positive trends have pointed to signs of business recovery in the automotive industry despite existing challenges around supply.
“This seems to be especially the case when it comes to business registrations of light commercials, utes and vans,” Ms Morgan said.
“There’s a general expectation that we’ll see an uplift in both financing and registrations of business vehicles as we approach the end of financial year.”
Ms Morgan also said that customers have been utilising the federal government’s instant asset write-off scheme in the past year.
“We expect this demand to continue following the recent budget announcement, and we welcome the extension of the scheme until mid-2023 as a major boost for Australian businesses,” she concluded.
One measure that brokers can highlight to their SME clients is the fact that they can make tax deductions on asset they may wish to purchase.
In the 2021-22 federal budget, the government extended the instant asset write-off scheme (or the temporary full expensing measure) until 30 June 2023 to allow eligible businesses with aggregated annual turnover or total income of less than $5 billion to immediately deduct the full cost of eligible depreciable assets such as vehicles of any value acquired in October 2020 and first used or installed ready for use by 30 June 2023.
The extension of the measure was welcomed by SMEs and brokers alike.
Figures from the Australian Bureau of Statistics (ABS) recently showed that an 11.6 per cent rise in machinery and equipment investment had propelled business investment levels in the March quarter, the strongest rise since December quarter 2009.
Meanwhile, ABS’ insights into Australian business conditions and sentiments for May 2021 revealed that 13 per cent of small businesses, 12 per cent of medium businesses, and 13 per cent of all businesses who had sought additional funding reported that they had not been successful in obtaining the funds.