Economic climate has PacLease confident about year ahead

PacLease Australia said growing confidence in Australia’s economy could also prove beneficial to the commercial vehicle rental market this year.

In an exclusive interview with CRTNews sister publication, Prime Mover, Director of PacLease Australia, Olen Hunter (pictured), was adamant that growing confidence in the economy will translate into a growing need for individualised finance and leasing solutions in 2017.

“Even though there has been the odd political hiccup, overall business sentiment has been very solid going into 2017,” he said. “I am yet to speak to a fleet that says business is on the decline, which is a fantastic sign. The low point reached during the 2016 election campaign is very much history now, commodity prices are going up and OEMs are busy quoting new equipment. We are bullish about the year ahead.”

However, sensitivity towards cash flow will remain high, Hunter added. “As transport businesses go back into expansion mode, there are a lot of competing needs for capital, so leasing equipment suddenly becomes an interesting alternative. Especially small and medium-sized businesses increasingly opt for using someone else’s capital to gear up instead of tying up cash flow.”

Despite an overall positive outlook that has included a recent expansion by PacLease nationally, Hunter said long-term planning has become a luxury many can’t afford, and with most tenders now dictating equipment that is less than four years old, extended deprecation processes may not make sense for everyone anymore.

“After experiencing what it’s like to go through a slowdown with too many assets on the books, many businesses want more cost certainty this time round, which is where I see a chance for leasing businesses like us.”

The rental market will also benefit from a recovering economy, he added, as the same dynamics apply. But there is an additional advantage: With heavy truck sales on the rise and a variety of new models like the Kenworth T610 coming to market, Hunter said renting equipment could be the perfect solution to cover the waiting time for a new vehicle or test drive a new model in a more realistic setting.

“Anecdotal evidence has it that the backlog for certain new models is already rising, so renting equipment could be the perfect solution,” he said – pointing out that the first T610s have already been rented out.

“Technology is changing rapidly at the moment and people want to see what it’s like to drive one of those new trucks in the environment they’re used to – and there are now a lot more smart options to make that happen. Managing equipment and keeping cash flow will be the linchpin for many businesses in 2017.”