Mechanical Engineering in Crisis: How Sale and Lease Back Secures Liquidity and Strategic Flexibility

The German mechanical engineering sector is facing a deep crisis in the autumn of 2025. Declining orders, rising financing costs and a weakened automotive industry have significantly cooled the market. According to the VDMA, order intake in September was 19 per cent below the previous year’s level. For a key industry, this is a severe setback.

Many companies now find themselves caught in a familiar dilemma: revenues are falling, liquidity is tightening, and banks are only willing to provide limited additional funding. At the same time, investment is urgently required to modernise production processes, tap into new markets or enable restructuring. The asset-based financing model known as Sale and Lease Back often provides a promising option to meet market demands in such phases.

When Banks Shift to Risk Mode

Banks tend to act cautiously during economically weak periods. When financial statements and balance summaries deteriorate, credit commitments are rarely expanded. In many cases, existing credit lines are even reviewed or reduced.

This creates a vicious cycle:

• Fewer orders lead to lower revenues and earnings.
• Lower revenues weaken creditworthiness.
• Weaker creditworthiness results in more restrictive bank lending.
• This, in turn, prevents companies from investing in promising future technologies.

The result is stagnation at a time when flexibility and quick decisions are more important than ever.

Sale and Leaseback: Unlocking Liquidity While Continuing to Use Machinery

A highly effective way out of this situation is the Sale and Lease Back model. This financing solution makes it possible to release capital tied up in existing machinery—without removing it from production—while also realising hidden reserves in the machine fleet.

How the process works:

1. An independent expert such as G+S Werkzeugmaschinen evaluates the machine or the entire machine fleet.
2. A partner bank or leasing company purchases the machinery at market prices.
3. The purchase price is paid out immediately, improving liquidity and, if applicable, earnings.
4. The machinery is then leased back—typically over 48 months—and continues to be used in production.

Production continues without interruption. At the same time, the company gains short-term liquidity while benefiting from predictable leasing rates in the long term. In uncertain times, this model becomes increasingly relevant, as it works independently of traditional bank loans and provides effective balance-sheet relief.

Economic Uncertainty Requires New Thinking

The current crisis in the mechanical engineering sector is driven by several factors:

• The tariff dispute with the United States is hindering exports and raising costs for international business.
• The automotive sector, a major customer, is investing far more cautiously.
• Rising interest rates and weak domestic demand are dampening willingness to invest.

For many companies, this means that new machinery purchases must be clearly justified economically. Decisions that would have been taken for granted only a few years ago are now scrutinised far more critically.

From Sale and Lease back to Direct Liquidity Generation Through Machinery Sales

Many companies currently face the challenge of needing short-term liquidity to cover running costs, pay suppliers or bridge economic bottlenecks. Alongside traditional models such as Sale and Lease Back—where machinery is sold and then leased back—another option is gaining significant importance: the immediate sale of unused or decommissioned machinery and reserves.

This often involves equipment or capacities that no longer make a productive contribution yet still tie up capital. Unlike Sale and Lease Back, this creates an immediate liquidity effect without subsequent rental obligations. By selling these machines, tied-up capital is released directly, providing companies with immediate additional funds without entering into long-term commitments.

This helps businesses remain solvent even in critical phases. The targeted disposal of decommissioned assets contributes to immediate stabilisation and creates the necessary room for manoeuvre to meet obligations and continue operations securely.

Conclusion: Safeguarding Liquidity and Remaining Operational

In economically challenging times, both the traditional Sale and Lease Back model and the targeted sale of unused machinery and idle capacities can be decisive steps towards securing urgently needed liquidity. Our approach focuses particularly on the direct release of capital tied up in existing machinery, enabling companies to strengthen their short-term financial position without making new investments or entering additional leasing contracts.

Both approaches pursue the same goal: the rapid and reliable provision of liquidity. We support companies in making sensible use of their existing resources and safeguarding their financial stability sustainably. In this way, we contribute to ensuring that businesses can remain economically viable even in difficult situations.

If you currently have unused machines or are considering a Sale and Lease Back solution, you can easily offer them to us using our purchase form:
Purchase of machines & company takeovers | G+S Machine tools

Alternatively, Mr Markus Braun is available as your contact for all matters relating to machinery valuation, machinery purchasing, financing services and Sale and Lease Back.