INDUSTRY IN FOCUS
Early this year, US publication, Rental Equipment Register’s Frank
Manfredi identified the US rental market is expected to surpass
$32 billion in 2013.
Mr Manfredi said all the economic uncertainty and financial
insecurity of the past few years has led to very positive revenue and
utilisation growth for the equipment rental industry.
“
Recent Baird/RER equipment rental surveys showed four
consecutive quarters of double-digit growth followed by more
moderate single-digit growth in the most recent quarter surveyed.”
He said more contractors and homeowners are turning to
equipment rental to supplement their equipment needs instead of
investing their dollars in new equipment and fleet purchases.
Mr Manfredi’s opinion is the market will benefit from a number
of tailwinds allowing it to continue growing at double-digit rates
into 2014 and perhaps beyond. “Overall, we are forecasting 2013 US
rental of construction equipment will increase 16% to more than $32
billion. The economic uncertainty has actually been a big benefit for
the rental industry. Equipment users facing an uncertain future have
turned to renting as a way to conserve cash.
“
Renting is also an alternative for users who may be unable to
obtain equipment purchase financing. The case for rentals is still
strongest for equipment users utilising their machines 50% of the
time or less. Anyone who has a need for a production machine that
is a primary tool in their fleet would be better off purchasing it,” Mr
Manfredi said.
“
EPA emission regulations that began in January, 2012 have also
benefitted equipment rentals. The regulations require many new
machines built after January 1, 2012 to be equipped with Tier 4
interim engines. Machines equipped with Tier 4 interim engines are
considerably more expensive than machines with Tier 3 engines.
Uncertainties remain regarding the performance of these units.
“
Preliminary indications are the new engines are more expensive
to operate as well. The higher operating cost indications are based
on the experience of on-highway truck users who have been
operating Tier 4 engines since 2010. The higher machine purchase
price and possibly uncertain operating performance also have caused
uncertainty over the future residual values of new machines, which is
another factor that has driven users to favor rentals.
“
Recent data indicates 52% of all new machines sold are going
into the rental fleets of national rental companies, authorised dealer
rental fleets and rental fleets owned by independents.
“
The national rental companies had a great year in 2012. Revenues
grew in a range from 8 to 38% with an average of approx. 12%.
“
Rental revenue growth has been driven by supply and demand.
Fleet utilisation rates (based on time) were the highest they have
been since 2008, which has allowed companies to aggressively
increase their rates,” Mr Manfredi said.
“
Rental companies have been hard pressed to keep up with
the growth of the market. As a result we saw massive capital
expenditures in both of the past two years. Most companies said they
will continue adding to their fleets in 2013, however, the mix will be
different. In 2011 and 2012 rental companies anticipated demand for
earthmoving equipment would come back before demand for aerials
and lifting equipment. In both years rental companies changed the
mix of their fleets toward earthmoving and away from aerial work
platforms and other lifting equipment.”
Frank Manfredi is president of Mandelein, Illinois-based Manfredi
&
Associates, a marketing information firm. Visit
www.machineryoutlook.com
.
Rental Equipment Register - rermag.com
HR
US rental industry
forecast to surpass $32bn
MAY 2013 | HIRE
AND
RENTAL
NEWS
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