New CBA data shows small and medium-sized businesses are investing in equipment and vehicles, particularly “green” fleets despite uncertain economic environment.
Australian businesses have stepped up their investment plans over the past 12 months despite the slowing economy, with new data from the Commonwealth Bank of Australia’s business bank showing a 22 per cent uplift in vehicle and equipment financing compared to the same period last year.1
The new figures show a record number of businesses are financing greener assets, with electric vehicle fleets up more than threefold (325 per cent) and hybrid motor vehicles up 120 per cent. Small businesses are leading the way on this front, leveraging CBA’s Green Vehicle and Equipment Finance, with electric vehicle financing up 346 per cent in the sector.
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 per cent year-on-year), led by purchases on moulding machines, packing and cutting machines, silos and other food manufacturing machinery.
CBA’s Executive General Manager of Business Lending, Grant Cairns, says 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,” Mr Cairns said.
“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.”
The release of CBA’s data coincides with new industry data from East & Partners showing CBA is the largest primary asset finance provider in the Australian market.2 The East & Partners research also shows fast applications and settlement is the key reason business customers switch providers.
Mr Cairns said small businesses were continuing to maximise their cashflow through asset financing, and expects this to continue, especially in light of the Federal Budget measures announced earlier in May.
“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,” he said.
1CBA asset finance data FY24 YTD (July-March) vs same period in FY23
2East & Partners March 2024 survey of 1293 enterprises with an annual turnover of A$1 million plus.
