Regardless of how old their equipment is or how tantalizing the new technological innovations are, manufacturers this year likely will base their equipment-buying decisions on one factor.
That's the assertion of the Equipment Leasing and Finance Association, which recently unveiled its top 10 equipment-acquisition trends for 2013.
"Corporate perceptions of the economic outlook will be a primary driver of business investment decisions," the association explained in a news release.
Although the association expects investment in equipment to grow in 2013, uncertainty over fiscal-policy issues such as the debt ceiling will temper that growth, particularly in the first half of the year.
"Some companies will remain cautious about taking on large capital investments even now that important decisions impacting short-term fiscal stability have been made," the association said.
"Equipment acquisition activity will gain momentum through relief from the policy uncertainty that brought the economy to the edge of the fiscal cliff. An improving housing sector will provide an added boost."
Among other trends on the association's radar:
- Pent-up demand will drive investments in construction, agriculture and transportation equipment. Meanwhile, "other equipment types will await the replacement cycle."
Overall, the economy needs to get stronger "before significant equipment investment expansion takes place," the association said.
- Low interest rates will be an incentive for businesses to finance equipment purchases.
- Seven out of 10 business will use at lease one form of financing to buy equipment. Of the $1.3 trillion in capital investment that is projected for 2013, $742 billion, or 55%, will be financed through loans, leases and lines of credit, according to the association.
- Size will matter when acquiring equipment in 2013. Larger businesses expect to increase equipment spending over the next 12 months, while small companies are less likely to do so because of their concerns about the economy and their challenges in obtaining financing.
- Along with changes in how companies consume software and hardware, cloud computing will spawn new financing options for IT purchases. Companies will look to equipment financiers for variable-payment structures in the cloud.
- Credit-market conditions will remain favorable for long-term equipment financing. Businesses will find an improving credit supply as they consider equipment acquisitions.
- The one-year extension of bonus depreciation might provide incentives for businesses to acquire equipment. The continuation of the depreciation bonus will allow businesses to deduct up to 50 percent of the cost of new-equipment purchases in 2013.
- Businesses will begin to adapt their equipment acquisition strategies to comply with long-awaited changes to lease-accounting standards. A new draft of proposed changes to lease accounting standards by the Financial Accounting Standards Board and the International Accounting Standards Board should be announced this year, enabling businesses to begin to evaluate how their balance sheets, earnings and other financials will be affected by equipment financing agreements.