Large scale investments in the European Union (EU) on diverse infrastructure projects such as renewable energy, development of urban areas and improvement of roadways have spurred the demand for heavy construction equipment.
Moreover, the tightening government regulations on emissions and safety standards in Europe has prompted the adoption of environmentally friendly construction equipment and/or needs refurbishment and upgrades on current ones. The combined impact of these trends means only one thing, a potential for immense growth in the construction machinery sector.
Research from market analyst, Technavio suggests the EU construction equipment industry will grow at a CAGR of 4.4% to 2027, with a projected market valuation of approximately €9.04bn.
Taking your construction business towards a sustainable future is not just a trend – it’s a construction revolution. See how a strong financing partner can help put you on the right path in this journey.
The space includes several strong construction equipment manufacturers and dealers which only means competition is high when it comes to standing out and being known for an edge in the market. Moreover, the soaring costs of construction equipment are impeding market expansion for most manufacturers and dealerships due to end-users grappling with the financial strain of purchasing expensive machinery. Consequently, they may resort to outdated machinery due to financial constraints, hampering productivity and efficiency.
In considering avenues for gaining a competitive edge, equipment manufacturers and dealerships may find that construction equipment financing holds significant promise. Providing customers with optimal construction equipment financing solutions can alleviate cashflow constraints and enhance their purchasing power. Moreover, exploring the benefits of construction equipment financing can not only boost sales but also elevate the overall customer experience.
If you want to find out about specific financing solutions and are looking for a partner who can help you plan and offer such solutions, reach out to us here.
Top 5 benefits of construction equipment financing
Accelerate sales
In 2022, over 35,000 construction projects were kicked off across major European cities, collectively valued at EUR 500 billion euros, presenting substantial growth prospects for construction equipment dealers and manufacturers. Capitalizing on such favorable market conditions entails accelerating deal closures.
For manufacturers, this involves expediting stock distribution through an engaged dealer network. Meanwhile, for dealers it means accelerating sales by offering flexible financing at the point of sale to minimize pricing objections.
Manufacturers can expedite their sales process by supporting their dealer networks with seamless construction equipment financing options such as floorplan financing to enable immediate bulk purchases, while dealers can enhance end-user experiences by offering leasing and loans with manageable monthly payments and ownership choices.
If you want to find out more about various types of financing options that you can bring to your customers, explore this resource.
Boost revenue and drive more margin per sale
At the very beginning of the supply chain, equipment manufacturers can increase their revenue by offering floorplan financing to dealer networks. Working with a strong construction equipment financing partner on a solution like this means reduced Day Sales Outstanding (DSO) and an increase in steady revenue.
On the other hand, further down the supply chain, dealers offering leasing options to end users mean more repeat business opportunities and a predictable pipeline. Financial solutions such as leasing provide your customers with a choice to return, upgrade or purchase an equipment. Often, customers want to stay up to date with the latest technology in the market and end up upgrading their equipment to newer models. This means not only customer retention but repeat purchases and contract renewals from the same customer, guaranteeing a steady stream of revenue and more margin per sale.
Increase customer retention
Offering financing alternatives, whether to dealerships or to end customers, serves to efficiently manage their budget and cashflow while fostering a stronger rapport compared to cash transactions or any kind of upfront payments alone. This strengthened relationship often lays the groundwork for future sales. Additionally, dealerships providing leasing options can lead to repeat purchases from the same customers, enhancing retention and fostering greater customer loyalty over time.
Expand into new markets
Venturing into new markets poses significant challenges for construction manufacturers and dealers, including upfront investments, extensive market research, and establishing suitable business networks.
Hence, forming partnerships with the appropriate financing solutions provider can offer a reliable pathway to enter new markets and approach opportunities with assurance. For example, solutions like floorplan financing present an excellent means for manufacturers to access dealer networks in fresh markets and forge robust relationships in specialized sectors right from the outset. In this light, financing serves not only as a catalyst for seizing business prospects but also as a guiding support through unfamiliar territories.
Here’s a story on how our Australian team helped our Europe based partner expand into the Australian market with a robust financing solution. Watch video.
