What are the hottest equipment sectors for the equipment finance industry in 2025? Construction, machine tools, medical equipment, oil/gas/energy and tech/computers are the five top-ranked, according to the “What’s Hot/What’s Not: Equipment Market Forecast 2025.” This year marks the 35th anniversary of the report, authored by Carl Chrappa, Gregory Chrappa and Susan Savon of The Alta Group, revealing industry perceptions of 15 equipment markets based on a survey of ELFA member asset managers and consultants.
With one exception, the order of the top six equipment types was identical to last year’s, showing equipment finance companies are comfortable with certain equipment types. Overall, the report shows that equipment finance companies have become more optimistic to some extent on almost all types of equipment, a reflection of the expected effects of lowering interest rates, curbing and cutting regulations, and a growing economy.
The following examines the top five equipment types:
#1 Construction
Construction equipment was the big winner of the survey, once again edging out machine tools and medical equipment, which tied for second place. However, in net residual value sentiment it fell from last year, and market values have also softened. The outlook for construction remains excellent, based on pent-up demand for highway, commercial and civil projects.
#2 (tie) Machine Tools
Machine tools finished in second place again this year, with respondents reporting by far the best net increase in assumed residual values of all types. This ranking is believed to be linked to demand from the contract machining and allied industries. Orders in this sector increased sharply in 2021 by around 50% year over year, fell 5% lower in 2022 than 2021’s record year, then dropped again in 2023 and 2024 by 10.7% and 7.5% respectively. However, total orders still remain elevated.
#2 (tie) Medical
Medical equipment improved one place this year to tie with machine tools for second place, with a slight increase in preference and the fifth best residual value score. The future of healthcare finance remains undetermined with changes to the on-again, off-again Affordable Care Act, and adjustment to the loss of pandemic-related subsidies. Leased equipment remains popular in this industry, with capital investment driven by demographics linked to the increasing health care needs of the baby-boom generation. U.S. healthcare spending is projected to have risen in 2023 by an estimated 7.5% to $4.8 trillion.
#4 Oil/Gas/Energy
Oil/gas/energy finished in fourth place, up from eighth place last year. Just 10 years ago this sector was in second place. This segment also finished in fourth place in net residual value assumptions, rising to the top of other equipment types, an improvement once again over last year. Its outlook has improved considering the change in administrations. The new administration is expected to support oil and gas drilling and soften regulations related to the energy industry. There are still new regulations set by the Biden administration, EPA and CARB that could negatively impact this sector.
#5 Tech/Computers
This industry continues to operate on very low margins but has a vast secondary market.
In 2024, global new computer sales rose 0.7%, which is expected to be followed by a forecast 3.5% drop in 2025. Spurred by AI, server shipments are forecast to grow 70% in 2024, 33% in 2025, and 13% in 2026. Global revenues from semiconductors and semiconductor equipment grew 19% and 6.5%, respectively, in 2024, with respective 14% and 7% growth forecast for 2025.
The “What’s Hot/What’s Not” report is available exclusively to ELFA members via the ELFA Knowledge Hub.