What's Not: Equipment Market Forecast 2019
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WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
What’s Hot,
What’s Not:
Equipment Market
Forecast 2019
1WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
The Equipment Leasing and Finance Association is the trade association representing financial
services companies and manufacturers in the $1 trillion U.S. commercial equipment leasing
and finance sector. ELFA exists to provide member companies a platform to promote and
advocate for the industry, including attracting and developing new and diverse talent; a forum
for professional development and training; and a resource that develops information about, and
for, the industry.
Equipment Leasing and Finance Association
1625 Eye St NW, Suite 850
Washington, DC 20006
www.elfaonline.org
2WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Table of Contents
Executive Summary.........................................................................................................................................................................................................................4
Equipment Outlook Overview..................................................................................................................................................................................................5
Equipment Ranking Analysis.....................................................................................................................................................................................6
Changes in Residual Assumptions.....................................................................................................................................................................................11
Survey and Scoring Methodology........................................................................................................................................................................................12
Composition of Respondents...................................................................................................................................................................................12
Survey Results of Future Opportunities...........................................................................................................................................................13
2018 Volume Results vs. 2017..............................................................................................................................................................................14
Best and Least Favorable Future Equipment Finance Opportunities.....................................................................................14
Final Overall Ranking.......................................................................................................................................................................................................16
Changes in Preference..................................................................................................................................................................................................16
Bonus Questions................................................................................................................................................................................................................................18
About the Author...............................................................................................................................................................................................................................18
3WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Executive Summary
What are this year’s hottest equipment markets? What’s Hot/What’s Not: Equipment Market Forecast 2019
provides industry perceptions of 15 equipment markets based on a survey of Equipment Leasing and Finance
Association (ELFA) members. Along with responses on economic conditions, this report is designed to assist
lessors in identifying business opportunities for future success.
Results from What’s Hot/What’s Not: Equipment Market Forecast 2019 reveal that construction equipment
was the overall winner in portfolio preference for the sixth year in a row, while printing remained in last place.
In addition, trucks/trailers and machine tools finished second and third, respectively, while medical and hi
tech/ computer remained in the top five for the second year in a row. A look at the top three finishers reveals
that yellow iron and industrial equipment seem to be a class above the rest.
This year marks the ninth year in a row of positive survey results. However, it also shows less volatility within
the market, as illustrated by the order finishes of this report’s survey compared with last year’s. That said,
some equipment markets have fallen in popularity to the point where knowledgeable operating lessors with
solid market experience can take a contrarian view to parts of this survey, and consider a sharp drop in
popularity for a given equipment type to be an opportunity for future business success.
Perhaps the industry’s perception can best be summed up from open-ended survey responses about the
greatest threats to the secondary market. Based on the comments received, the economy, oversupply of new
and used equipment, and the health of global trade are the biggest concerns.
4WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Equipment Outlook Overview
The results of the 2019 Forecast survey reveal the following overall ranking of equipment types for portfolio
preference among ELFA members:
1. Construction 9. Aircraft
2. Trucks/Trailers 10. Marine/Intercoastal
3. Machine Tools 11. Telecom
4. Medical 12. Tie: FF&E, Automobiles
5. Hi-tech/Computers 14. Oil/Gas/Energy
6. Rail 15. Printing
7. Plastics
8. Containers/Chassis
These rankings are based on the amount of future financing volume (unweighted), and the best and least
favorable future equipment financing opportunities (weighted).
Chart I
FINAL OVERALL SCORE AND RANKING
(Lowest Score Being the Best) 28
26
25 25
23
19
18
17
15
13
9
8
6
4
2
Construction
Trucks/Trailers
Machine Tools
Medical
Hi-Tech/Computers
Rail
Plastics
Containers/Chassis
Aircraft
Marine/Intercoastal
Telecom
Automobiles
FF&E
Oil/Gas/Energy
Printing
5WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Equipment Ranking Analysis
#1 Construction
Construction was the big winner of this year’s survey, ranking first for the sixth consecutive year and edging
out truck/trailer by two points. It also ranked number one in largest increase in residual value sentiment, a very
powerful one-two punch. The equipment finance industry seems to be very comfortable with this segment,
due to its rather “standard” equipment designs, long useful lives, broad demand in domestic and global
markets, and finally, its vast and “transparent” secondary market. The outlook for construction remains good,
based on pent-up demand for housing and commercial structures, as well as civil projects. An infrastructure
bill, if passed, would be a huge plus to this already hot segment.
#2 Trucks/Trailers
Trucks/Trailers finished in second place for the second year in a row. In 2018, year-over-year new Class 8
truck sales increased sharply by over 30 percent due to strong global trade and cargo demand, although
the driver shortage is a limiting factor. New trailer shipments increased to over 300,000 for the year, the
third highest ever. Trailer orders in November 2018 were up over 100 percent year over year, the fifth best
month in history. Sales of used trucks and trailers remain very good. The volume of used Class 8 trucks sold
increased by around 10 percent in 2018, and likewise so did prices. Thus, there is continued optimism for this
equipment type. This sector has greatly benefited from a strong economy, low interest rates and increased
consumer confidence.
#3 Machine Tools
Machine tools finished in third place, with a slight decrease in preference from last year and the second
highest net jump in respondents increasing assumed residual values. This ranking is believed to be linked to
demand from the strong transportation and allied industries. Based on preliminary data, primary market sales
for metal cutting equipment rose by over 12 percent in 2018. However, this positive trend is not expected to
continue at high levels through 2019, due to softening economic conditions. Already, for 2019 the automotive
industry has announced year-over-year declines of more than 25 percent in spending.
December 2018 marked the 28th consecutive month the ISM’s Purchasing Managers’ Index (PMI) scored
above 50, indicating continued manufacturing expansion. According to a recent survey, at least one-third of all
2019 machine tool spending is planned for horizontal and vertical machining centers, with turning equipment
seeing the highest growth rate, especially horizontal lathes with 10-inch (or smaller) chucks. Job shops and
the transportation industries are expected to account for more than half of consumption.
The secondary market for machine tools has been strong, buoyed for the past few years by the shortage of
tools manufactured from 2008 to 2010. However, a dip in used pricing is expected in 2019, as the relatively
plentiful 2011 to 2012 tools are now entering the market.
6WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
#4 Medical Equipment
Medical equipment finished in fourth place, the same as last year, with an increase in preference. The
industry still suffers from confusion regarding the future of healthcare finance with changes to the Affordable
Care Act, and its effect on hospitals and clinics. The industry has a preference for leased equipment, which
continues unabated, driven by demographics linked to the increasing health care needs of the baby-boom
generation. However, various deductible reimbursement account (DRA) cuts, rules, etc., aimed at the industry,
are weakening some equipment markets. Reimbursements were reduced for analog x-ray in 2017 and in
2018 for computerized radiography (CR), to push healthcare providers to digital radiography (DR).
The 2002-04 peak in MRI scanner installations foretells of a corresponding replacement peak in the
near future. Thus, sales of CTs and MRs are forecast to increase by over 5 percent in 2019. The medical
equipment secondary market is robust, and the global refurbished equipment market is forecast to grow
sharply from 2018’s estimated level of $8.4 billion to approximately $11.9 billion
by 2021.
#5 Hi-Tech/Computers
Hi-tech/computers finished in fifth place, with a small percentage of respondents lowering residual values,
and an overall increase in preference. The industry continues to operate on very low margins but has a vast
secondary market. Thus, volume is important.
In 2013, global computer sales dropped by a record 9.8 percent due to the rapid increase in sales of
smartphones and tablets. In 2015, global PC sales plunged by 10.6 percent, surpassing 2013’s record
decline, then declined again by 6 percent in 2016 and by 3 percent in 2017. After 14 previous consecutive
quarters of declining unit sales, global PC shipments actually grew slightly in Q2 2018, were flat in the third
quarter, then fell sharply by 4.7 percent in the fourth quarter to finish down 1.3 percent for 2018.
Based on preliminary data, global server shipments grew more than 15 percent in 2018, and revenues
grew more than 30 percent, with growth expected to continue into 2019, spurred primarily by an ongoing
enterprise refresh cycle and continued demand from cloud service providers. Intel introduced its new Optane
DC persistent memory to be released for general availability in the first half of 2019. Unlike traditional DRAM,
Intel’s new technology will offer the advanced combination of high capacity, high speed, affordability and
persistence. OEMs and CSPs have announced beta services and systems for early customer trials.
#6 Rail
Rail finished in sixth place, one better than last year. 2018 was a very good year, as carloads shipped
increased by a solid 1.8 percent over 2017. In addition, for the fifth time in the past six years, intermodal traffic
hit an all-time high, as those shipments increased by 5.5 percent. Total carloads for all car types, including
intermodal, increased by 3.7 percent.
Railcar supply and demand is still somewhat of a problem, especially in the OT hopper car, gondola, and
CBR tank car markets. New design standards and regulations have adversely affected the flammable and
hazardous material tank car fleet and could lead to many scrappings. New railcar deliveries are expected to
increase by over 10 percent this year.
7WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
#7 Plastics
Plastics equipment finished in seventh place, the same as last year, with no change in preference and a net of
respondents decreasing residual values. Currently, this market segment continues to perform well in almost all
categories.
Sales of new injection molding machines increased slightly again for the ninth year in a row after substantial
declines in 2007-2009. Used prices for plastic injection molding machines have increased 25 percent to 30
percent and more over the past six years. Much of this is thanks to the automotive industry, which requires
high-capacity IMMs for its products, and auto parts suppliers which utilize small to medium capacity plastic
equipment.
However, new and used blow molding equipment prices related to PET bottling have declined due to
advances in technology and industry consolidation. This sector scored in the top half of the survey again this
year, with predictions of sales volume holding steady in 2019.
#8 Containers/Chassis
Containers/ chassis finished in eighth place, four places lower than last year, including a sharp decrease
in preference, but fourth best in net residual value position. Over the past year, due to robust global trade,
primary market sales for ISO containers in 2018 declined slightly to 3.3 million TEUs. Strong demand caused
an increase of around $600 in new container prices from 2016 levels. Used container prices remain relatively
high by historical standards. For 2019, global containerized trade is expected to remain good. This bodes well
for the continued strength of this market.
#9 Aircraft
Aircraft finished in ninth place, the same as last year. This year popularity fell, after an increase last year,
and net residual value positions were fifth lowest. This indicates that equipment finance companies remain
cautiously optimistic about this equipment. Respondents appear to view parts of the aircraft market as being
challenged, with some improvement seen in the commercial sector, dampened by technology changes in the
emerging next generation new engine option (neo) aircraft.
The aircraft segment is one of the segments that was expected to benefit the most from changes in the new
tax law, and sales did, in fact, increase in 2018. There is a sense of optimism in the global business jet market
as ‘full sale’ transactions increased again through September 2018. Used prices increased for corporate
jets, with the largest increases in super-mid jet and turboprop segments of 23.7 percent and 18.8 percent,
respectively.
The helicopter market remains depressed due to oil patch and offshore logistics conditions.
8WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
#10 Marine/Intercoastal
Marine/Intercoastal rose to 10th place from 13th place last year, showing a sharp increase in preference, but
a decline in net residual value sentiment. This overall improvement is felt largely to be due to the effects of
several large bankruptcies in this segment being resolved. The healthy global economy helped seaborne trade
bounce back strongly. However, the number of sales and purchases fell sharply by about 90 percent, largely
due to 2017’s record number of secondhand sales in the blue-water marine market.
Secondhand prices rose modestly by 2.9 percent for bulkers and 5.5 percent for tankers. Also, container ship
earnings improved by over 25 percent for the year. Meanwhile, prices stabilized throughout the intercoastal
segment, as the supply and demand equation started to come into balance with high scrap prices promoting
the scrapping of laid up vessels.
New prices for hopper barges have fallen by over 20 percent from past highs. OSV and PSV markets remain
in poor condition with general utilization rates at or below 50 percent. Crew boats have seen discounts of 50
percent or more compared to four years ago. Inland river push boats on the market for sale remain at high
levels. Meanwhile, ship docking tugs and coastal/ocean going tugs are in high demand.
#11 Telecom
Telecom finished in 11th place, up from 13th last year, with an increase in preference, but net residual value
sentiment falling by the fourth most. This equipment segment is turning the corner as capex spending is
expected to take off in the second half of the year to make ready for the 5G ramp. Sales in the secondary
market are presently stable. Also, sales of new and used IP PBX systems continue to grow. Note: 5G
“Standards” are expected to be developed by 2020.
#12 FF&E and Automobiles (tie)
FF&E tied for 12th place, one place lower than last year. FF&E showed a sharp decline in preference, and net
residual value position sentiment declined by the sixth most of any type. The secondary market continues to
be flush with inventory affecting wholesale prices, but also continues to improve.
Last year sales in the primary market increased by just over 5 percent, and look to increase again this year.
Meanwhile, not surprisingly, the copier segment is challenged and is expected to remain so. In response to
continued declines in new copier sales, OEMs first fought for market share and control of the secondary
market but have now progressed to reductions and restructuring.
There is some cause for optimism in the FF&E segment given that job creation is again forecast to increase
by over 2.1 million this year, though not 2018’s 2.6 million, which will have an impact on new office space,
requiring furniture.
Automobiles finished tied for 12th place, one place lower than last year. Wholesale prices for all used light
vehicles declined by just under 2 percent in 2018. However, prices paid for used cars at retail level increased
by about 4 percent, with an average price of $22,000. New U.S. light vehicle sales rose around 0.4 percent
to about 17.24 million but are projected to fall in 2019 to around 16.4 million. 2018 saw continued strong
demand for new light trucks, SUVs, and crossovers, capturing about 70 percent of the market. These trends in
market composition are expected to hold in the near term.
9WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Concerns over subprime loans have created an element of risk for lenders. Dealers are switching to promoting
used car sales for their subprime market customers. Oversupply of used vehicles and an expected record
number of lease returns should create downward pressure on residual values in the near term. This most likely
accounts for the segment’s worst net residual value sentiment score, which tied with printing.
#14 Oil/Gas/Energy
Oil/gas/energy finished in 14th place, down from 10th place last year. Just five years ago this sector was in
second place. In the 2016 survey, O/G/E’s score smashed the ‘weighted results’ all-time record low set by
printing in 2013. It is still currently viewed in a very negative light, with a net residual value position sentiment
about the same as last year’s. This finish seems to reflect the current state of the oil and gas market in the
U.S., with oil prices increasing for most of the year then plunging 40 percent from October to year’s end.
This has also affected values of oil/gas production and exploration equipment, as well as operating cash
flows. The Baker Hughes total rig count during January 2019 showed a year-over-year increase of about 16
percent. According to the EIA, WTI prices in 2019 are expected to average in the range of $54 to $57 per
barrel. Meanwhile, solar and wind power, both supported by tax incentives and government support, had good
years, with wind adding over 20 GW and solar adding 8 GW of capacity.
#15 Printing
For the seventh year out of the past eight, printing equipment finished in last place. This equipment type
continues to register a poor showing in this survey. These results seem to sum up the equipment finance
industry’s continued very negative outlook for printing equipment. Meanwhile, its net residual value sentiment
tied for last with automotive. The economics surrounding this industry remain challenging, as more and
more publications, flyers, newspapers, etc., move away from print media to digital. Meanwhile, digital press
sales continue to increase at the expense of traditional press room equipment. Inkjet remains the dominant
technology.
Overall this equipment segment appears very weak. There is some promise in the specialty offset market,
especially for plastic and packaging printers. Used equipment inventories have significantly shrunk, and a
supply and demand balance is returning to the industry, albeit with lower volume and pricing compared to nine
or 10 years ago.
10WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Changes in Residual Assumptions
Residuals Trending Lower
Respondents were asked for the change in the amount of residual value assumed in 2018 per specific
equipment type in comparison to 2017. The results found on Chart II show that the industry became even
more conservative in booking residuals in 2018. This reflects a growing concern over the impact of increasing
interest rates, global trade concerns, a split Congress, and return to a regulatory environment.
In 2018, four types showed increased residuals (vs. five in 2017), and 11 types showed decreased residuals
(vs. 10 types in 2017). It should be noted that 2010 was the third time in the 29-year history of this survey
that all equipment types scored negative. 2018’s results showed lower highs and higher lows compared to the
prior year. This illustrates the impact of the previously noted economic outlook and other concerns on residual
value assumptions.
Chart II
CHANGES IN RESIDUAL POSITIONS
By Equipment Type (+ increase / - decrease)
30
+26
25
20 +18
15
10
+6
5 +3
0
-5 -2 -3
-5
-10 -7
-9
-15
-14 -14
-20
-25 -22 -23
-30
-35 -31 -31
Construction
Machine Tools
Rail
Containers/Chassis
Hi-Tech/Computers
Plastics
Trucks/Trailers
Medical
Marine/Intercoastal
FF&E
Aircraft
Telecom
Oil/Gas/Energy
Printing
Automobiles
Overall, on a net percentage basis, 18 to 26 percent of respondents increased residual values for construction
equipment and machine tools. Also a net 3 to 6 percent of respondents increased residual values for
containers/chassis and rail. All other types had residuals lowered, with the largest declines in oil/gas/energy,
printing and automobiles. It is clear that the industry is becoming more entrenched in its views on residual
value positions.
11WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Historically, increases in residual positions, taken together with positive results of 20 or more in the survey’s
future business volume question, indicate a strong willingness on a lessor’s part (or if negative, a lack thereof)
to aggressively seek (or avoid) business within certain equipment types. Overall, this year’s survey shows one
type very positive (construction), compared to three types last year and one type the year before. Meanwhile
four types (telecom, O/G/E, printing and automobiles) showed ‘very negative’ results this year, versus seven
types in 2018. Thus, these results show again that lessors have become more comfortable with their residual
value assumptions, but also seem to be preparing for a softer economy.
Survey and Scoring Methodology
ELFA conducted a confidential online survey consisting of 12 questions in December 2018 and January
2019 among equipment managers and consultants throughout the United States to assess their perceptions
of equipment types and other market and economic conditions. A total of 121 responses were received,
of which 86 percent were lessors, asset-based lenders or financial advisors; and 12 percent were service
providers.
Composition of Respondents
Lessors reported that they added the following amounts of equipment to their portfolios in 2018:
• 33% added up to $50 million
• 9% added $50 to $100 million
• 23% added $100 to $500 million
• 14% added $500 million to $1 billion
• 10% added $1 to $3 billion
• 11% added over $3 billion.
Thus, the survey was heavily influenced by the 33 percent of lessors in the “up to $50 million” category and
58 percent of lessors who added $100 million or more of equipment to their portfolios in 2018. This year’s
survey shows a more even representation than in past surveys that were heavily influenced (72% to 78%) by
the $100 million or more categories.
COMPOSITION OF RESPONDENTS
Amount of equipment
added (in $US)
11%
$0-$50MM
10%
33% $50-$100MM
$100-$500MM
14% $500MM-$1BN
9% $1-$3 BN
23%
>$3 BN
12WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Survey Results of Future Opportunities
One of the most important survey questions asked for the total dollar amount (volume) of business per
specific equipment type expected to be booked by the respondent’s firm in 2019 compared to 2018.
Respondents were asked to select “increase,” “about the same,” or “decrease,” with the final score, referred
to as a Net Rising Index (NRI) representing the net difference between the percentage of respondents
increasing and decreasing for each type. Chart III illustrates the ‘NRI’ results for the 15 equipment types
surveyed.
Chart III
UNWEIGHTED FUTURE OPPORTUNITIES RANKING
Best (+) and Worst (-) By Equipment Type
70
+63
60
50 +48
+45
40
+33 +33
30
+25 +24 +24
20 +18
+14
10
+2 +0
0
-10
-20 -15
-23 -24
-30
Construction
Trucks/Trailers
Machine Tools
Hi-Tech/Computers
Medical
Marine/Intercoastal
Plastics
Rail
Aircraft
Containers/Chassis
Telecom
Oil/Gas/Energy
Printing
FF&E
Automobiles
Overall, this year’s volume results were similar to last year’s. Thus favorable scores were tabulated for many
of the same types of equipment as last year. For example, construction scored the highest again compared
to the 2018 and 2017 surveys. This year’s survey results were also a bit more even compared to last year’s,
perhaps due to the more even portfolio size spread, or lessors just becoming comfortable with their favorites.
Based on past surveys, a score of 20 or greater indicates a strong preference for adding a specific type
of equipment to the portfolio during the coming year, while a score of -20 or greater indicates a strong
preference for not adding. Chart III shows a strong preference for adding eight types of equipment, two
more than last year. This year’s survey also found a strong preference for ‘not adding’ two types (FF&E
and automobiles), the same number as last year. Thus, the results of this year’s survey strongly resemble
a “topping” shape, meaning conditions have normalized at high levels and sizable increases are harder
to achieve. This also means that the volume of equipment to be leased in 2019 is expected to increase
moderately.
13WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
2018 Volume Results vs. 2017
Using the same NRI scoring methodology, respondents were asked for the total current amount of business
(volume) that was booked by their firm per specific equipment type as of year-end 2018 versus 2017. The
responses, illustrated in Chart IV, indicate business conditions were stronger in 2018 compared to the year
before.
Chart IV
2018 FINANCING BUSINESS VOLUMES v 2017
By Equipment Type (Unweighted)
100
+83
80
60 +59
+50
40
+32
+27 +25
+21
20 +18
+14
+8 +7
0 +0
-8
-20 -15
-24
-40
Construction
Trucks/Trailers
Machine Tools
Containers/Chassis
Hi-Tech/Computers
Rail
Medical
Aircraft
Plastics
Marine/Intercoastal
Oil/Gas/Energy
Telecom
Automobiles
FF&E
Printing
There was a strong preference for seven equipment types, compared to three types last year and five the
year before. This year’s survey also showed printing still remains largely out of favor. The 2019 report results
are better than 2018’s, with most scores higher across the board. This illustrates that the industry’s volume
growth rate is reflective of a strong economy and mature marketplace and that volume increased in 2018.
Best and Least Favorable Future Equipment Finance Opportunities
For clarification and correlation purposes, a ‘weighted’ approach to scoring the survey was used by asking
respondents to pick only the three best and three least favorable future equipment financing opportunities (in
order, 1 through 3) by specific equipment type.
The results for each equipment type, illustrated in Chart V, were weighted by assigning a numerical weighting
(multiplier) to each ‘place’ selected, whether positive or negative. For example, a first place vote was assigned
five points, a second place vote three points, and a third place vote one point. A weighted score was tabulated
for each equipment category by multiplying the actual number of votes for each place by their respective
multipliers, then summing the total. A final weighted equipment score (net weighted score) was determined by
calculating the difference between each equipment type’s total positive and total negative weighted scores.
14WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Chart V
2019 FUTURE FINANCING BUSINESS VOLUMES
By Equipment Type (Weighted)
200
178
150
112
100 89
68
50 43
9 1
0
-14 -25
-50
-54 -55 -58 -67
-100
-110
-150
-158
-200
Construction
Trucks/Trailers
Machine Tools
Medical
Hi-Tech/Computers
Rail
Containers/Chassis
Plastics
Aircraft
Automobiles
FF&E
Telecom
Marine/Intercoastal
Oil/Gas/Energy
Printing
This year the weighted results for the most part, show a very close correlation with the unweighted results
(see Chart III) in that the general order of equipment types—best to least favorable—is similar in both
approaches (weighted/unweighted). This lends support to the survey’s findings. However, the overall weighted
scores showed higher highs and lower lows, showing the industry seems to have settled on asset types it
views as favorable or not. The enormity of this year’s most positive and negative scores indicates, for the ninth
year in a row, that the industry is still focused on certain equipment types.
The weighted scoring approach indicates the level of preference, strong or weak, for a specific type of
equipment, whether positive or negative. It is interesting to note that this year’s top two and bottom two
scores are polar opposites, clearly showing exactly “what’s hot and what’s not” in the industry. Overall, survey
respondents rated five equipment types very high (20 or greater) versus four last year, and seven equipment
types very low versus five last year. Thus, these higher highs and lower lows again indicate that equipment
finance companies are selective about which equipment types to focus on, while also preparing for the effects
of a slowing economy on some segments.
15WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Changes in Preference
Table I shows a comparison between the overall results of the 2019 and 2018 surveys in order to determine
trends of preferences in financing toward or away from certain types of equipment over the past year. Once
again, the overall combined scores taken from the final rankings for each of the two years were compared.
The lower the score the better, and the larger the year-over-year difference the greater the trend toward or
away from a given type.
In comparing the two surveys, the equipment finance industry’s overall perception of construction, trucks/
trailers, machine tools and medical equipment remained high. Preference also increased nicely for marine/
intercoastal, and telecom, while on the other hand, lessors’ preference moderately declined for oil/gas/energy,
containers/chassis, and FF&E. The best year-over-year improvement came from marine/intercoastal. On the
other hand, the worst year-over-year move came from oil/gas/energy. Overall it appears that during the past
year equipment finance companies have developed a greater preference for seven types versus six in 2017;
no change in preference for two types, the same year over year; and diminished preference for six types,
versus seven the previous year.
16WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Table I
Equipment Survey Results
2019 vs. 2018
Overall Ranking Scores
Equipment Type 2019 Score 2018 Score Difference
CONSTRUCTION 2 2 +0
TRUCKS/TRAILERS 4 5 +1
MACHINE TOOLS 6 5 -1
MEDICAL 8 11 +3
HI TECH/COMPUTERS 9 11 +2
RAIL 13 15 +2
PLASTICS 15 15 0
CONTAINERS/CHASSIS 17 11 -6
AIRCRAFT 18 17 -1
MARINE/INTERCOASTAL 19 27 +8
TELECOM 23 27 +4
AUTOMOBILES 25 24 -1
FF&E 25 20 -5
OIL/GAS/ENERGY 26 19 -7
PRINTING 28 30 +2
17WHAT’S HOT, WHAT’S NOT: EQUIPMENT MARKET FORECAST 2019
Bonus Questions
This year’s survey also included four bonus questions dealing with GDP, unemployment, inflation and the
prime lending rate. Results indicate respondents believe the following:
• U.S. GDP will increase during 2019 by a consensus of around 2.5 percent, down from 2.8
percent last year.
• The unemployment rate at year-end 2019 will be about 3.7 percent, down from 3.8 percent last
year.
• The inflation rate for 2019 will be approximately 2.2 percent, down from 2.3 percent in 2018.
• The prime rate at year-end 2019 will be 6.0 percent, up from 5.25 percent last year.
About the Researcher
Carl C. Chrappa, Senior Managing Director - Asset Management Practice Leader of The Alta Group, LLC, is a
registered auctioneer, recognized expert witness, and nationally (A.S.A.) as well as internationally (M.R.I.C.S.)
tested and accredited senior equipment appraiser with over 40 years of experience. Mr. Chrappa is uniquely
qualified to author this article, since he actively trades in global equipment markets, and provides appraisals
and equipment consulting services to companies throughout the world. He is also a member of the National
Association for Business Economics (NABE) and since 2009 has served as a panelist on the Federal Reserve
Bank of Philadelphia’s Livingston Survey, which twice a year forecasts macroeconomic moves in the U.S.
economy. He also serves on the Institute for Supply Management’s (ISM) monthly PMI survey panel.
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