WHAT ARE THE TOP EQUIPMENT ACQUISITION TRENDS FOR 2024?
ELFA UNVIELS THE TOP 10 TRENDS!
As we look ahead to 2024, it's crucial for businesses to stay updated on the latest equipment acquisition trends. With technology advancing rapidly, companies need to be prepared to invest in the right tools and machinery to stay competitive. In this article, we will explore the top 10 equipment acquisition trends that will shape the business landscape in 2024. From the rise of automation and artificial intelligence to the increasing demand for sustainable and eco-friendly equipment, we will continue to provide valuable insights and strategic recommendations to help your business make informed decisions when it comes to acquiring new and used equipment. Stay ahead of the curve and ensure your company is well-equipped for success in the coming year.
According to ELFA the Top 10 Equipment Acquisition Trends for 2024 are:
The U.S. economy will likely have a soft landing. While a recession is still possible in the first half of 2024, the likelihood of a “soft landing” is increasing. The combination of cooling inflation, a healthy labor market and improved consumer sentiment support a forecast of 1.7% growth in real S. GDP in 2024.
The pace of growth in capital spending will improve during the year. Real equipment and software investment growth of 2.2% is expected this year. While slightly slower than the growth rate experienced in 2023, stronger investment activity is expected in the latter half of the year.
Downward pressure on interest rates will ease borrowing costs. After a tumultuous higher interest rate environment, easing inflation has led the Federal Reserve to plan for incremental rate cuts in 2024 and beyond. These will be welcome developments amid tightened credit availability and weaker credit demand.
The majority of equipment acquisitions will be financed. In 2024, more than half (54%) of equipment acquisitions will be financed. Eight out of 10 businesses will use leases, secured loans or lines of credit for their acquisitions, as they will find these to be beneficial options compared to outright purchases of equipment.
Automation and robotics will drive major investments by industrial businesses. Businesses in logistics, retail and consumer goods, food and beverage, and the automotive industries will lead in investment in robotics and automation. A general lack of experience with the new technology will require equipment manufacturers and dealers to focus on providing quality customer service to help get end users up and running. Globally, industrial automation will grow more than 8% annually through the next decade.
Equipment-as-a-service will ease businesses’ access to productive assets. With the global equipment-as-a-service market growing at an annual compound rate of around 50% through 2030, more U.S. businesses will deploy subscription-based equipment usage. They’ll shift from a capital expenditure to an operating expense model to eliminate substantial upfront investment and have greater flexibility as equipment OEMs provide a single point of contact for equipment and related software, supplies and services.
Businesses will dive deeper into artificial intelligence. As automation and robotics handle specific, repetitive tasks, U.S. businesses will explore ways to incorporate artificial intelligence that recognizes data and simulates human thinking into their processes. Marketing and technology functions will lead in AI use and other early adopters will enjoy competitive advantages.
Many equipment types will thrive as still-elevated interest rates drag on investment growth. While equipment and software investment is unlikely to experience breakout growth in 2024, construction machinery, computers, software and aircraft will be strongly positioned through the first half of the year. Materials handling equipment investment also looks promising despite falling growth in 2023.
Investment in climate-focused projects will accelerate. Climate-focused initiatives will continue to grow in industries from transportation to consumer goods as regulators, consumers and partnering businesses in the value chain require compliance. Projects will be supported by unprecedented funding from sources including the Inflation Reduction Act (IRA) and financing from financial institutions and independent lenders.
“Wild cards” will factor into business investment decisions. Businesses will keep an eye on other areas that could impact their equipment acquisition strategies in addition to the trends above. A global economic slowdown, the Israeli-Hamas war, Russia-Ukraine war, continued animosity between the U.S. and China and the 2024 elections will be among the impacts to watch this year.
