Manufacturing firms worldwide are increasingly deploying asset finance to facilitate equipment acquisition and technology upgrade, according to a study from Siemens’ Financial Services (SFS).
Conducted amongst the global top 40 industrial machinery and equipment manufacturers, the research said 76% of respondents have seen increased customer demand for asset finance when acquiring manufacturing equipment over the last two years.
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The study shows that usage of financing in the last 24 months varies in different regions of the world.
In Europe, the use of asset finance remained static amongst manufacturing firms, attributable to the slow business investment environment.
In contrast, the proportion of manufacturing equipment sales enabled through asset finance has risen over 2% per year in the US, and remarkably by over 15% per year in Asia. The great difference in growth rates must be viewed in the light that asset finance is still in a relatively early stage of its development in Asia compared with the mature economies of the West.
In the next two years, 93% of respondents expect global interest in asset finance to increase still further from their manufacturing customer base.
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By GlobalDataIn particular, use of asset finance is expected to grow by over 5% annually in Europe, reflecting a previously deferred need to invest as economic confidence returns. In the US and Asia, uptake of asset finance by manufacturing firms is expected to continue to grow annually by 3% and by over 14% respectively.
Strong demand for manufacturing equipment finance is expected to come from China, Poland and industrial Eastern Europe (countries that have a particularly heavy concentration of manufacturing), and south east Asia. The growing popularity of asset finance is likely to be fuelled by budget pressures, with 72% of respondents reporting a "squeeze" on their customers’ capital equipment budget in the last two years.
Brian Foster, head of industry finance at SFS, said; "Access to up-to-date technology is critical to a manufacturing company’s competitive position, cost-control and productivity. By using asset finance, businesses can meet the constant demand for high-specification, tailor-made equipment in a financially sustainable way."
