News & Views

Stay up to date with your industry

CONTACT US

Economic Recovery and Capital Investment

The Australian economy has faced significant challenges over the past 12 months. Given this (and the reality of an ongoing global pandemic), it's very pleasing to see a level of positivity re-emerging in the Australian business community. According to the March edition of the ACA Research COVID-19 SME Monthly Tracker, half of SMEs expect Australian economic conditions to strengthen over the next three months. This stands in stark contrast to their expectations of the global economy, with just one in four SMEs expecting to see this level of recovery outside of Australia.

As a result of these improved economic conditions, many businesses are planning to ramp up their capital investment, looking to set themselves up for the year ahead. The COVID-19 SME Monthly Tracker suggests that they will increase their investment in three key areas: capital expenditure, number of staff and wages (covering both new and existing employees). Of particular interest to the automotive industry is capital expenditure (which includes vehicles as an asset category), with one in five SMEs expecting an increase in this area. 

 

These intentions are useful in providing a broad perspective of the market, but we do need to recognise that many of those businesses maintaining or reducing their capital expenditure will still be replacing end-of-life machinery. The COVID-19 SME Monthly Tracker also therefore provides feedback on specific asset classes, exploring purchase intentions over the next three months. Based on this, we can see that around one in five SMEs are considering acquiring Light Commercial and Passenger vehicles  over this period, ahead of Heavier Commercial Vehicles, and specialised equipment relevant to industries like Agriculture and Construction. Combining these figures, just under half of SMEs are considering vehicle purchases over the next three months.

Looking at the new vehicles sales, businesses have acquired almost 100,000 vehicles in the first quarter - a significant portion of new vehicle sales market. While this is a good start, positive economic indicators suggest growth over the next quarter (and through the rest of 2021), as fleets replace outdated vehicles, or add the new ones required to expand operations.

We're regularly producing new content, so make sure you are subscribed to our newsletter to stay up to date, and feel free to reach out to our automotive experts if you have any questions.

Topics: Market Research Automotive Research Thought Leadership Research