ELFA Releases Equipment Finance Activity Survey

July 18, 2011 – Despite the equipment finance industry’s regaining volume in 2010, according to the 2011 Survey of Equipment Finance Activity (SEFA) by the Equipment Leasing and Finance Association (ELFA), Washington, D.C., the industry is still struggling.

 

The survey reports an 3.9 percent overall increase in volume in 2010, compared to a significant 30.3 percent decline reported in 2009, and a 2.2 percent decline reported in 2008.

 

According to the U.S. Census Bureau, during the first five months of 2011, construction spending amounted to $285.1 billion, 6.3 percent below the $304.4 billion for the same period in 2010. New orders for construction equipment increased 75.9 percent year over year in the first quarter of 2011, to $10.7 billion. Shipments of construction equipment increased 56.4 percent year over year in the first quarter to $9.1 billion after increasing 64.6 percent year over year in the fourth quarter of 2010.

 

“Through 2010, the equipment finance industry showed gradual but steady growth,” said William G. Sutton, president and CEO of ELFA. “Although uncertainty about the broader economy continues, more recent data collected in the first two quarters of 2011 suggests the trend toward an improved equipment finance industry is continuing.”

 

According to the June 2011 Rouse Construction Rental Report, for the month ending May 31, 2011, Index of Orderly Liquidation Values (OLV) for used equipment across the 14 major construction rental equipment categories increased 0.7 percent over the previous month. For the six months ending May 31, 2011, average index values increased 9.7 percent. Construction equipment orders were nearly 6 percent above shipments. 

 

However, new business volume reported by ELFA member companies of equipment financing for the construction industry decreased to 6.0 percent in 2010 from 6.5 percent in 2009. Member companies financed for construction equipment decreased to 7.4 percent in 2010 from 7.8 percent in 2009.

 

Some other key findings for 2010 as reported in the 2011 SEFA: Total new business volume increased by a moderate 3.9 percent, just under half of the survey respondents experienced an increase in volume between 2009 and 2010. All market segments showed growth in volume, except for the small-ticket segment, which saw a contraction in volume. Captive equipment finance organizations saw the strongest increase in new business volume (11.3 percent). Independents saw their volume grow by 5.2 percent, reversing their significant 46.3 percent decrease. Banks saw a 0.9 percent decline in volume. Financial measures such as return on average assets (ROA) returned to levels last seen in 2006, while return on average equity (ROE) showed a robust leap to 22.1 percent and the average ROE reported by the survey between 2001 and 2009 never rose above 15 percent.