The lack of Capex for all equipment in Europe has been a notable and growing concern impacting most 
manufacturing and retail sectors including the previous resilient Mittelstand in Germany.
CFO’s across Europe are all balancing costs, and future projects and expenditure, often against falling revenues.
In France, the EU has stated that this year, they will have subdued investment set to weigh on growth, and they went further on Germany, stagnation, followed by a sluggish recovery. They are not alone, most of the Dachs region and the rest of Europe is in a similar situation.
So what is going on?
Economic Uncertainty
1.Global Economic Slowdown: Uncertainty in the global economy, exacerbated by geopolitical tensions, trade conflicts, and varying recovery rates from economic downturns, has made European companies more cautious in their spending. Exports are down in many countries that looked towards China for continued and future growth.
2.Inflation and Interest Rates: Higher inflation rates and increased interest rates raised the cost of borrowing, thereby discouraging investment in new equipment. As an observation, rates go up quickly, but come down slowly!
3. Supply Chain Disruptions. The pandemic disrupted global supply chains, leading to delays and higher costs for equipment and raw materials, with some countries now starting to stockpile various commodities, to try to ensure their future economic stability.
4. Geopolitical Instabilities. I never thought that in our lifetime, we would give this a cause of uncertainty concerning leasing! But times have changed. This has led to a lack of confidence, uncertainty in the future.
Regulatory and Environmental Pressures
1.Environmental Regulations: Stricter environmental regulations in Europe have pushed companies to invest more in sustainable technologies, which can be costlier and require longer-term planning and commitments. The desire to go “green” is strong, but most countries simply lack the infrastructure.
2.Technological Transition: The shift towards digitalization and green technologies requires substantial upfront investment, which some companies may find difficult to justify without clear short-term returns. Changes in equipment are no longer considered every two or three years event. Radical changes or updates now often occur in weeks or months, meaning possible obsolescence within a year! Not ideal for a serious investment.
Sector-Specific Issues
1. Industrial Sector: Traditional manufacturing and industrial sectors, which are significant in Europe, face a higher barrier to modernisation due to the cost of adopting new technologies like automation and robotics.
2. Service Sector: The service sector across Europe, particularly SMEs, often has limited access to capital, making it difficult to invest in high-cost equipment.
Investment Climate, the Perfect Storm
1.Risk Aversion: Investors, banks and finance companies are becoming more risk-averse, preferring to hold onto cash reserves, to help them comply with Basel 111 regulations.
2.Venture Capital: A shift in venture capital trends towards AI software and digital solutions. Heavy equipment and manufacturing industries are not the flavours of the year.
So consider all the above, this is what your sales team is facing.
How can Oak help your sales team?
Sales are based on features, advantages, and benefits. By minimising the amount required that a customer has to consider, not say €84K, but a quarterly rental of €4,762, just under €53 per day you are minimising the cost objection over the advantages and benefits of your equipment. The larger the equipment cost, the better the monthly rental will appear.
For €84k, your customer will automatically ask the question, what is the best discount you can offer, but if the cost is presented as a rental, there is less of a pushback from the customer.
The customer can upgrade his equipment to the latest at any time during the rental period, overcoming obsolescence.
Why use Oak?
1.With access to over forty European funders, we have the robust financial capacity to fund your customer’s requirements.
2. Oak covers thirty European countries, local documentation and support.
3. Established for over thirty years
You will not win every opportunity that may come your way, but by using Oak, you will close more sales, and at a better margin.
Look what our suppliers say,
As a leading worldwide precision CNC manufacturer, ANCA provides our customers with crucial production elements with our machines and technology. Our customers require quick and flexible decisions to optimise their capacity. Oak is a crucial ANCA partner to this end. Their professionalism and excellent funding network make them an ideal finance partner for efficient and effective financing throughout Europe.”
Martin Winterstein, Managing Director, ANCA Europe GmbH
We are available on Teams, Zoom, FaceTime and Meet, why not give us a call just like Martin did, he knew where it would lead!
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