Australian businesses are continuing to invest for the future with new data from Commonwealth Bank showing financing for equipment and machinery was up 21 per cent in May, compared with the same time last year.
CBA's Executive General Manager Business Lending, Clare Morgan, said asset financing across a number of sectors within CBA's Business Bank continue to surge as businesses restock and invest in new assets.
"The construction industry in particular, has benefited from multiple government stimulus packages, including record investments in public infrastructure projects and the Homebuilder grant. We're also seeing strong demand for vehicle financing and machinery, particularly in the food manufacturing and agriculture sectors. In fact demand for agriculture machinery is the highest we've seen in several years."
The construction industry has seen significant year on year growth of excavators (up 191 per cent) and other earthmoving equipment (up 121 per cent). The agriculture industry has also seen growth in the financing of energy efficient equipment such as lower emitting tractors (up 88 per cent) and loaders (up 73 per cent) compared to this time last year.
"Many businesses are also taking advantage of CBA's Energy Efficient Equipment Financing (EEEF) which rewards customers with a 0.5 per cent discount on financing for energy efficient vehicles, equipment and projects. In the agriculture market, we have seen significant growth in the second half of the year as supply and confidence has grown," said Ms Morgan.
In addition, the market has responded to the Federal Government's $1.5 billion Modern Manufacturing strategy with significant growth in welding units (up 112 per cent) and compactors (up 32 per cent) compared to May 2020.
Over the last year, the work from home trend experienced by Australian businesses has led to a 43 per cent increase in computers and a 75 per cent increase in laptops financed as people look for ways to stay connected remotely.
"Government incentives have helped stimulate this growth and we've seen thousands of our customers take advantage of the instant asset write-off scheme over the past year alone, so it's great the Federal Government has extended the scheme for another year."
CBA vehicle asset finance trends that compare May 2021 to the same time last year, show:
- Total car financing has increased 35 per cent;
- Automotive repair equipment has increased 93 per cent. This is largely due to the vehicle supply issues relating to the pandemic, similar to why there is currently a very buoyant secondary vehicle market; and
- Light commercial vehicles between 2000 to 3500 kilograms has increased 136 per cent; benefiting from the government's manufacturing and construction stimulus.
