(27 May 2024 – Australia) New CBA data shows small and medium-sized enterprises (SMEs) are actively investing in equipment and vehicles, particularly “green” fleets despite an uncertain economic environment.
Australian businesses have stepped up their investment plans over the past 12 months despite the slowing economy, with CBA business bank asset finance data for FY24 year-to-date showing a 22 percent uplift in vehicle and equipment financing year-on-year (YOY).
Manufacturers are also stepping up their investment in new assets, with a 24 per cent jump in funding of manufacturing and industrial equipment such as manufacturing lines, forklifts, and scissor lifts. Funding activity has been particularly strong among regional manufacturers and agribusinesses, (up 42 percent YOY) led by purchases on moulding machines, packing and cutting machines, silos and other food manufacturing machinery. The figures reveal a record number of businesses are financing greener assets, with electric vehicle (EV) fleets up more than threefold (325 percent) and hybrid motor vehicles up 120 percent. Small businesses are leading the way, leveraging CBA’s Green Vehicle and Equipment Finance, with EV financing up 346 percent in the sector.
Based on direct interviews with 1293 enterprises with annual turnover of A$1 million plus, East & Partners newly released Australian Asset Finance Markets service confirms CBA is the largest primary asset finance provider in the Australian market by relationship share. Fast applications and settlement is the key reason nominated by business customers to switch providers.
“The broad-based increase reflects post-Covid business growth as well as businesses evolving their models to invest in energy efficiency improvements. Business confidence remains strong despite economic headwinds from higher rates and inflation, and we are seeing growing investment in assets across agriculture and manufacturing, supported by an improved supply chain landscape in a post-Covid world,” commented CBA Executive General Manager of Business Lending, Grant Cairns.
“Companies are also stepping up investment in the energy transition, with more businesses looking to improve their energy efficiency through equipment upgrades or the increased adoption of electrified transportation and replacement fleets. Part of this shift is driven by customers taking advantage of government rebates and subsidies and looking at longer term actions to reduce costs and demonstrate returns on investment. We welcome the extension of the Federal Government’s instant asset write-off scheme (IAWO) as a way to help free up cash flow for small businesses. As small businesses lean into the energy transition – as evidenced by the sharp increase in green asset financing over the past year – government support such as the IAWO could help propel this trend” Mr Cairns added.