Capital Equipment News February 2018

FINANCING

Scania Finance & Insurance Southern and East Africa has recently grown its portfolio to cover 70% of total Scania sales in the region.

Gap well bridged

That conventional financing institutions often have their appetite for risk at its lowest during difficult business cycles is no overstatement. Consequently, funding big-ticket acquisitions such as commercial vehicles can be a real headache for commercial vehicle operators. Equipped with a precisely opposite approach – which is to support customers in both good and bad times – Scania Finance & Insurance Southern and East Africa, the captive finance arm of Scania South Africa, has adequately bridged the financing gap for regional Scania customers, and testimony to this is the doubling of its portfolio in the past three years, writes Munesu Shoko .

T he decline in the South African commercial vehicle market – which fell 2, 65% year-on-year in 2017 to 25 042 total units sold – is testimony to the tough times in which truck owners currently operate. According to Petr Novotny, MD of Scania Finance & Insurance Southern and East Africa, several challenges have had an adverse impact on the truck market locally. In South Africa, the political unrest in 2017 ushered in a volatile economic situation through several credit rating

reluctance by conventional financial insti- tutions to fund such big-tickets purchases, especially during times of uncertainty. It is for this reason that several original equip- ment manufacturers (OEMs) offer captive financing solutions to their customers. According to a recent report, Captive Finance Firms in a Challenging Economy, Equipment Leasing and Finance Foundation, this is actually a growing trend globally. The report finds that approximately 30% of all capital equipment sales globally are financed by the

downgrades and low business confidence, for example. This impacted both the cur- rency and credit ratings, thereby creating difficult operating conditions for businesses, especially those that rely heavily on imports – such as capital fleet owners – due to the volatile exchange rate which pushed prices of capital assets higher. In such a difficult business cycle, one of the major challenges facing businesses is finding capital. Bear in mind that tangible assets such as trucks typically require a significant amount of capital. Of note is the

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