According to IHS Global Insight, the world’s leading economic forecasting authority, the United States Equipment Rental Business is growing four times faster than the general economy.
In 2012 rental revenue reached $31.3 billion, up 9.2% from 2011 and up 16.8% versus 2010 when rental revenues of $26.8 billion reached a low point in the midst of the great recession.
In 2013 rental revenue is expected to reach $33.6 billion, up 7.3% versus 2012.
2014 rental revenues are forecast to be $36.7 billion, almost equal to the $36.9 billion record level seen in 2007. By 2017, revenues are expected to reach $46.3 billion, well above the previous high.
This growth has been fueled by an increase in rental penetration as both consumers and businesses have discovered that it is less expensive to rent than to buy. As a result, more and more equipment is being manufactured for the purpose of rental. Another factor impacting the future growth of the category is the currently pent up demand for housing. All during the recession the population continued to grow and new households were formed, but many of these new households did not live in their own housing, preferring instead to live with relatives and others. Eventually this pent up demand will materialize in new construction which will further drive the growth of our industry.
Source: May 9, 2013 Forecast Update by IHS Global Insight
Looking at the major sub-segments of the category, IHS Global Insight forecasts the following:
• Construction and Industrial Equipment Rental revenue will reach $22.5 in 2013, up 8.4% from 2012. By 2017 revenues will reach $30.9 billion, up 48.6% versus 2012
• General Tool Rental revenue will grow to $8.5 billion, up 5.8% versus 2012. By 2017 revenues will reach $12.6 billion, up 55.6% versus 2012.
• Party & Event Rental revenue will be $2.5 billion in 2013, up 2.5% versus 2012. By 2017, revenues will be $2.8 billion, up 16.7% versus 2012.
Local Metro Area Data now inexpensively available through the ARA. Alert Management Systems recommends that rental store owners purchase this new local market data through the American Rental Association (ARA).
We believe this local data, which is updated and provided online each quarter, is critical for putting together realistic business plans for 2013 and beyond. After all, it is impossible to set realistic goals without knowing the environment in which a company competes. For each Metro area, the following data is provided for 2010-17:
• Construction and Industrial Equipment Rental Revenue
• General Tool Rental Revenue
• Party & Event Rental Revenue
• Total Rental Revenue
• Real Gross Metro Product
• Real Total Construction Revenue
• Total Retail Sales
• Total Employment
For $100 per year ARA members can purchase the national data. State and local major metro area data is available for only an additional $100 per state.
This information is available through ARA’s State of the Equipment Rental Industry Outlook 2010-2017 online Market Monitor, compiled by IHS Global Insight. For more information, go to www.ARArental.org/go/research or call ARA at 800-334-2177, ext 282.
(Note: This is one of a series of blog articles that will appear here frequently. All the blog articles focus on ways to improve rental operators’ profitability. All the ideas are based upon the proven experience of our most profitable rental operators. Return here often for additional proven business enhancing ideas. We welcome your comments.)