Lease financing will reach $10 billion in annual volume this year, according to study by the Equipment Leasing Association. The report, Construction and Agricultural Equipment Leasing, 2004: U.S. Market Dynamics and Outlook, says in 2005 the annual volume of agricultural equipment lease financing is forecast to increase to $10.5 billion.
Other highlights from the report include:
Agricultural business in the United States has been undergoing consolidation at all levels, from the number of farm operators to the number of equipment vendors.
The main ag-equipment categories for leasing include tractors, harvesting equipment, irrigation systems and treatment/application equipment.
Ticket sizes for lease financing of agricultural equipment range widely from $25,000 to more than $250,000, with the vast majority being small ticket items (less than $250,000).
Average lease terms are three years with some leases being written for as long as seven years.
Richard Carmichael, of R.S. Carmichael & Co., which conducted the study, says “lease financing is ingrained in the ag-equipment industry as evident by major manufacturers either having captive finance companies or formal leasing relationships with third-party commercial finance companies. They find lease financing a vital sales-aid tool.”
“Lease payments are not always on a monthly basis in the agricultural market,” added Michael Fleming, ELA’s president. “Farmers may make payments on a quarterly or semi-annual or even annual basis. Leasing’s flexible nature, fast turnaround, strong customer service, competitive rates are clearly key to the agricultural market.”
Among its key objectives, the report measures and characterizes the U.S. construction and agricultural equipment leasing market; identifies the trends affecting lease financing penetration in each market; evaluates the leasing practices and needs of customers and equipment vendors; and projects the U.S. construction and agricultural equipment leasing markets through 2005.
Organizations may purchase a copy of Construction and Agricultural Equipment Leasing: U.S. Market Dynamics and Outlook from http://www.ELAOnline.com/ELAstore/ or call ELA at (703) 527-8655.
For more information on the leasing industry, visit ELA online at http://www.ELAOnline.com or check out ELA’s informational portal for financial decision-makers, which includes the questions to ask before signing a lease and to access a directory of leasing companies, at http://www.ChooseLeasing.org