Mitsubishi Capital America Unveils Key Trends
As we step into the new year, Mitsubishi HC Capital America, a non-bank, non-captive finance provider in North America, offers a comprehensive exploration of the equipment financing landscape. In the wake of a year characterized by economic ebbs and flows, the company identifies some key trends expected to mold the trajectory of equipment financing throughout 2024.
Chuck McKay, senior vice president of corporate development at Mitsubishi HC Capital America, notes a shift in the economic narrative. https://www.mhccna.com/en-us
“Talk of recession, inflation, and interest rates have largely replaced conversations filled with worries about the supply chain,” says Chuck McKay, senior vice president of corporate development at Mitsubishi HC Capital America. “We may be turning the corner in 2024, with a year of rebalancing before a substantial growth period returns in the following years.”
With the alleviation of supply chain stress, commercial vehicle dealerships are witnessing an uptick in cash buyers, leading to shorter sales cycles. Dealerships, aiming to maintain optimal inventory levels, will increasingly rely on floorplan financing. Original Equipment Manufacturers (OEMs), recognizing the need to support their dealers, are expected to embrace floorplan financing as a strategic and effective means to facilitate this transition.
Post-pandemic, the business landscape between Canada and the United States continues to expand. Lenders equipped with robust cross-border financing solutions, extending beyond mere geographical presence, are poised to thrive in 2024. The increasing interconnectedness of markets necessitates financial solutions that seamlessly transcend borders.
The as-a-service business model continues to gain prominence across diverse industries. “Instead of financing a single product or a product for a specific use, the as-a-service model effectively allows a company to finance its entire balance sheet,” says McKay. McKay emphasizes the strategic decision-making involved in transitioning to an as-a-service provider. Beyond traditional financing, companies embracing this model must provide comprehensive services. McKay anticipates a surge in joint ventures and cooperative agreements as the as-a-service model embarks on the early stages of its growth S curve, projecting a steep trajectory continuing through 2024.
Asset sharing, a strategic collaboration among businesses to share assets, is gaining traction. By pooling ownership and resources, companies enhance asset utilization, resulting in reduced overall ownership costs. McKay notes that asset sharing and as-a-service models will blur and merge in 2024, especially as specialized equipment becomes more prevalent. The strategic intersection of these models will redefine how businesses approach ownership and utilization.
While concerns about potential interest rate increases from the Federal Reserve and fears of a recession persist, McKay points to positive indicators such as robust GDP and slowing inflation. He suggests the possibility of a "soft landing" and anticipates interest rates to remain relatively stable or potentially decrease. The beginning of 2024 is projected as a rebalancing period, with significant economic growth anticipated in 2025-2026.
Mitsubishi HC Capital America, with its consultative approach and a robust digital platform, stands at the forefront of these trends. Boasting assets exceeding $7.5 billion and a commitment to the United Nations Sustainable Development Goals, the company collaborates closely with equipment manufacturers, dealers, and end customers.
