The next quarter will see more Australian businesses actively acquiring assets, according to the latest Alleasing Equipment Demand Index.
Productivity and investment is set to rise, with almost three in ten businesses stating they intend to increase their asset base. This marks a 21 per cent rise since August.
“While the economy continues to tick along at below trend growth levels, the battle for market share is heating up,” Alleasing Chief Executive Officer Robert Spano said.
“The data we are seeing now suggests that businesses are conscious of being left behind by their competitors and consequently, asset acquisition is on the agenda in early 2015.”
The index revealed businesses plan on becoming more aggressive over the next quarter. Organisations with a turnover of between $5 and $100 million were found to the most assertive, with 39.5 per cent and just fewer than 32 per cent respectively planning to acquire assets. 23 per cent of smaller business, those with between $1 and $5 million in turnover, are planning the same.
Unproductive assets were highlighted as a key concern to 58 per cent of businesses, yet the figures varied across business sizes. 63 per cent of micro businesses and 68 per cent of small to medium sized enterprises (SMEs) said they were impacted by unproductive assets, substantially more than government agencies (45 per cent) and larger corporates (34 per cent).
The number of businesses planning to use leasing to increase their asset base has also increased, up to 16 per cent from August.
“Our data tells us that operating lease is favoured by 32% of firms that intend to acquire assets in the New Year, while outright purchase is favoured by 30%. ABS data shows a similar trend, with commercial loans for plant and equipment inconsistent however, actual data for lease finance commitments has been trending upwards since the fourth quarter of last year,” Mr Spano said.
Vehicles and IT&T equipment were found to be the assets in highest demand, with two thirds of assets said to be sourced domestically.
“Our research shows that equity investment remains the predominant form of finance across all business sizes,” said Mr Spano.
“Bank loans and trade credit follow and are almost on par, with leasing and hire purchase accounting for ~11.5% of a firm’s financing requirements.”