Talk to equipment managers today and the recession concerns of a year ago seem far away.

“Basically, 2024 did what every election year does: it remained flat until after the election,” says Joe Santora, President, Irontrax. “While we were down 5% in the first quarter, we’re going to finish the year up over 30%. The fourth quarter has been very busy.”

The Ansley Park Capital team under new ownership also had a strong year, says Kelly Lane, Senior Managing Director, Head of Asset Management. “We will originate over $400 million in new business volume in this first partial year,” he says, with the company benefiting from the significant growth seen in the non-bank space. 

“A recession was really top of mind at the beginning of last year, and now it’s on the back burner,” says Laura Grill, Vice President, Asset Management, Truist Equipment Finance.

That doesn’t mean there aren’t concerns. “I think everyone’s waiting to see what happens come January and that will be a big determining factor as to how we go forward in 2025,” Grill says.

“It’s hard to say what’s going to happen economically with the new administration, the potential of tariffs, and perhaps new immigration rules and regulations,” says Roseanne Neill, Director, Vice President, Equipment Management, Hancock Whitney Equipment Finance.

“Factors such as tariffs, interest rate adjustments and inflationary pressures could significantly shape the landscape for equipment management in 2025,” Lane adds.

And recession talk hasn’t gone entirely away. “We’ve been in a period of uncertainty for a while, which will continue as we see how the recent election impacts the economy,” says Robert Herb, Head of Global Asset Management, DLL, and Chair of ELFA’s Equipment Management Committee. “People have been preparing for this for a while, so it’s not a surprise.”

Tariffs on the horizon

Industry experts highlight tariffs as a significant market factor that could substantially affect equipment values.

“Tariffs will impact equipment values, both new and used, but how they impact them is still yet to be determined,” Lane says. “For example, we recently looked at a transaction involving four cranes manufactured in Finland. The leading manufacturer of cranes in the space is based in China, so once tariffs are put in place, the new cost of cranes manufactured in China might go up by 20%. It’s uncertain how this will impact cranes manufactured in Finland or other areas, but I expect it will make our cranes more valuable.

“On the other side,” Lane continues, “if you’re just buying a new crane from China, and must pay the higher price, then I’d expect that you will see more rapid depreciation.”

In addition to whole goods, tariffs on components originating from certain countries could also lead to price increases, Lane says. “It might be that manufacturers shift their supply chain to offset the higher costs, or they could just pass through the higher costs as a price increase. Tariffs could be beneficial to some equipment types and detrimental to others,” he says.

“Companies are being proactive,” Grill says. “Right now, there’s a lot of front loading of deliveries with the potential that the tariffs are enacted. Subsequently, companies won’t be pressured to immediately increase their prices.”

AI coming into focus

Once ephemeral, the potential uses of artificial intelligence are gaining shape.

“The big question is how do you leverage AI,” Herb comments. “How do you gather data through AI and incorporate it into your workflow? Companies that can adapt it more quickly will gain a competitive advantage.”

Finance companies are currently looking at incorporating AI into their sales processes to gain customer insights and approach potential clients in a customized way, Herb says. Others are looking at using AI in credit write-ups and analyzing financial statements.

“Everyone’s trying to find a way to monetize their data,” Santora says. “There are some concerns that AI will be able to value machines, but I don’t see that happening in the foreseeable future. When you’re doing evaluations, you really need to have your pulse on what’s happening, and many times these AI data points don’t have that.”

For example, equipment values at auctions can vary significantly even for nearly identical machines, Santora says.

“We’ve found AI data is still rough,” Neill says. “If you search the value of a Cat 988 wheel loader, for example, the values don’t come back consistent with what we see in standard valuation tools. Meaningful AI equipment valuations are still in their infancy.”

While AI is still developing, “look at equipment where there is a demonstrated improvement in productivity because of AI,” Herb says. He points to healthcare, where AI-enhanced equipment that delivers measurable improvements in performance or patient outcomes could command higher market value.

AI is already making sense in some use cases. Irontrax, for example, uses a company-trained version of ChatGPT to maintain a consistency in its appraisal narratives, Santora says. “The narrative portion explains the why, and some appraisers do a better job of it than others,” he explains. “We now have a template with the questions that need to be answered in every narrative, so if different appraisers are reporting to a client, there’s not a marked difference between the reports.”

Santora is leading an AI presentation during this year’s Equipment Management Conference & Exhibition (see sidebar). “We want to both introduce AI and demonstrate how it can be used, so people can go back into the office and immediately implement it,” he says.

Prices and markets

“It feels as if new equipment prices have somewhat stabilized, although it’s a mixed bag,” Lane says. “For instance, prices of dry van trailers have returned to pre-pandemic levels, but prices of cranes and vessels are still high.”

“Most markets are still slowly moving back to a more balanced state post-Covid,” Neill says. “Everything is cyclical. It just takes time to recover from these peaks and valleys.”

“Going into 2025, I don’t see any hot markets, at least not initially,” Lane says. “There’s still uncertainty about what the incoming administration will do, and organizations tend to delay their capital expenditures until there’s more clarity and confidence in the market.”

“Year over year, we saw a decline in used equipment values in many areas,” Lane adds. “We saw a correction in equipment values in 2024 that brought some normalization to the previous highs.”

Santora notes that construction industry sentiment is positive regarding anticipated policy changes with the incoming administration. Construction equipment dealers are currently overstocked, however.

“Rental companies and dealerships are usually the first to see an economic softening, and they start putting equipment in an auction,” Santora says. “It’s very much a mixed bag, which makes me think construction will remain flat in 2025.”

Global, regulatory concerns

Basel IV regulations remain a critical focus in banking, Herb says, where ongoing implementation is reshaping risk-weighted asset calculations. “It’s going to be important for asset managers to accurately show what’s in their portfolio, know their liquidation values and be able to statistically demonstrate them,” he says.

Part of determining portfolio value is using data from recognized secondary value sources, Herb says. “It’s all part of knowing the marketplace, which underlines the importance of attending the conference. The connections you make with service providers will expose you to sources of market data, and that’s going to be a bigger need in the future.”

Heading DLL’s LifeTech Global Asset Management, Herb also notes that sustainability continues to grow as part of the purchasing decision globally. “These concerns include whether or not the equipment can be refurbished, and if you can demonstrate circularity.”

Outside of the regulatory push, some larger companies are not just looking at price and functionality in equipment bids, which are first use considerations, but also the sustainability practices of the manufacturer, namely whether an asset can be reused, and recycling practices, Herb adds.

The role of asset manager has changed with the strengthening of regulatory compliance, Santora says. “Keeping up with regulations has been a big driving force in how things are done,” he says.

“Asset managers should always be vigilant on changing regulations, such as emissions, environmental impacts, energy efficiency, etc.,” Lane says. “Regulatory change is usually slow and evolutionary, so you do have time to adapt if it’s impacting your business.”

Generational change

Last year, ELFA’s Equipment Management Committee began its Prodigy program, designed to tap into the mindset of early-career professionals.

“We wanted to give them more of a voice in leading the direction of the committee and the programming we offer to the asset management community,” Herb says. “We now have four people on our committee that are newer in their careers and bringing new energy and ideas to the group.”

The result has been more conference educational sessions directed toward younger professionals, such as the one last year on asset management career planning, Herb says.

“How we help the next generation develop is crucial,” Herb says. “The best measure of your success is how successful you can make the people who come after you.”

Steady as she goes

While recognizing the inevitable challenges that come with any outlook, industry leaders express general confidence about the upcoming year and the role asset managers will play.

“We’re going to continue to center on our core assets,” Grill says. “We’re focusing on balancing asset growth and credit quality with discipline and risk management oversight.”

“Asset managers must have a thorough understanding of market conditions,” Lane says. “The past few years have underscored the importance of vigilance, adaptability and a historical perspective in equipment management.

“The ability to ask the right questions and maintain an informed outlook are critical,” Lane continues. “This is a time when experience, analytical skills and strategic thinking play a key role in asset managers navigating a complex and fluctuating market.”