Shift in trends toward rental driving the Construction Equipment Rental Market

 

In today’s economy and considering the cyclical nature of the construction industry, the benefits of renting construction equipment are amplified. Many contractors, construction companies, and a wide variety of industries are more and more exploring rental options. As cited by Keith Homes, Vice President of operations at the equipment rental platform BigRentz, there has been a significant shift from purchasing new equipment to the rental model among the contractors and construction companies that use the site. Many economists and business leaders foresee economic recession to be on the horizon, which may further fuel the demand for equipment rental and push companies even further away from leasing and ownership. There are several costs associated with the purchase of new equipment, such as the cost of equipment ownership, the initial asset cost, and the tenure to pay off equipment financing, plus maintenance and repair costs. Construction companies are wary of such costs and, on top of this cost factor, the cyclical nature of the construction industry and economic fluctuations can make it difficult for organizations to fully utilize the equipment they have purchased and obtain the most value, especially when that equipment is idle during slow business conditions. In this case, rental is an attractive alternative, particularly as some companies brace for economic recession and the potential implication of operational slowdown.

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The construction equipment rental market reached a record revenue of USD 93 billion in 2018 and is projected to reach USD 122 billion by 2024, at a CAGR of 4.3%, in terms of value, between 2019 and 2024. This is attributed mainly to the increasing revenue of construction equipment rental providers driven by major infrastructure projects in emerging markets and boom in residential construction in the US and Europe. Sales of construction equipment witnessed substantial growth in 2018, reaching 1.13 million units.

Excavators segment to lead the construction equipment rental market

Based on product, the construction equipment rental market is categorized into excavators, backhoes, loaders, crawler dozers, cranes, concrete pumps, compactors, transit mixers, concrete mixers, and others (asphalt pavers, finishers, dump trucks, industrial trucks, etc.). Among these, the excavators segment accounted to the largest share of the market in 2018 due to an increase in miscellaneous activities for construction, repair, and maintenance around the globe, which is expected to drive the growth of the construction equipment rental market. Moreover, the cranes segment is projected to grow at the highest CAGR.

Based on region, the construction equipment rental market is categorized into North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America. Among these, North America accounted for the largest share of the market in 2018 and is expected to continue in the same trend during the forecast period due to increase in building & construction activities in the region, coupled with favorable policies which lead to the demand for construction equipment rental. The market in the Asia Pacific is projected to grow at the highest CAGR during the forecast period.

Key players in the construction equipment rental market, such as United Rentals Inc. (US), Ashtead Group Plc (UK), Loxam (Paris), Herc Holdings Inc. (US), Aktio Corporation (Japan), Nishio Rent All Co. Ltd. (Japan), and Kanamoto Co. Ltd. (Japan), among others, are considered for the study.

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