Asset Finance Insights
Connective Asset Finance experienced record breaking growth in FY22, with the business generating $2.9 billion in settlements—a rise of 39% year on year.
Growth in settlement volumes can be attributed to the increase in Connective membership, businesses using government incentives to invest in equipment and vehicles as well as an increase in consumer spending on leisure vehicles such as boats and caravans.
Data from the Commonwealth Bank of Australia revealed settlements for vehicles and equipment grew 87% in the first half of FY22 compared with the previous 12 months, largely due to businesses rebuilding and trying to manage supply chain disruptions.
New car purchases soared in August 2022 with the Federal Chamber of Automotive Industries (FCAI) saying it was the best performing month for new cars sales since 2017. New car sales were 17% higher than in August 2021 despite supply issues, higher prices (up 22% on 2019 prices) and interest rate rises.
According to the FCAI, increases in purchases were spread relatively evenly across vehicle types from passenger cars to heavy commercial vehicles.
While new car sales are an economic indicator of a healthy economy, Equifax’s Quarterly Commercial Insights reported a 9.1% drop in asset finance applications in Q2 compared to the same time last year.
But this dip in applications needs to be viewed as a comparison between a very high month of applications in June 2021 (as businesses took advantage of generous government stimulus packages to replace or upgrade equipment) and more normal conditions.
Overall, despite higher rates and inflation, the outlook for the economy remains largely positive, providing opportunities for small business and SMEs to invest in assets to continue to rebuild and grow their businesses.