Following LiuGong’s recent acquisition of Herc Rentals China, Graziano Cassinelli, Director of LiuGong’s newly launched Global Rental and Used Equipment Business, spoke with IRN about LiuGong’s strategy for rental.
“Rental penetration in China is currently about 20%,” says Cassinelli, “And we expect this to grow to approximately 30% by 2025.”
Driving this growth is a change in mentality among Chinese contractors; “With rental, they don’t have large debts on their balance sheets from equipment purchases. It also gives them greater flexibility to respond to demand.”
Seizing the opportunity to tap into this growing market, LiuGong recently launched its Global Rental and Used Equipment Business, to be spearheaded by Cassinelli.
Cassinelli has a 30 year career in industrial and construction equipment behind him, working with CNH Industrial and Caterpillar dealers CGT and Barloworld Equipment. He is currently based in Singapore.
The focus will initially be on the Chinese and Southeast Asian markets, according to Cassinelli.
“Then next year, we will look to expand into Africa and Latin America. And in 2022 we will target the North American and European markets,” says Cassinelli.
To this end, LiuGong recently acquired Herc Rentals China and the closing date will be communicated soon. The company serves a range of construction and industrial customers, as well as shipbuilding and mining operations, throughout central China, with a focus on aerial work platforms (AWPs).
“But it will also be responsible for corporate accounts in China, such as China Railway, and through the company they will be supplied with any equipment they need to rent from LiuGong,” says Cassinelli.
Herc Rentals China has 1,500 units in its fleet, and LiuGong plans to double this over the next five years with an investment of $125 million. That money will not be spent solely on equipment though; it will also be used to double the number of rental outlets over the same period. Herc Rentals China currently has six main branches and five depots, according to Cassinelli.
When asked whether LiuGong was planning to make any other acquisitions soon, Cassinelli says, “It is part of LiuGong’s strategy to make further acquisitions, but there is nothing suitable at the moment. For now, we need to focus on developing Herc Rentals China.”
LiuGong will also rent equipment through its dealers in China. They will offer general heavy equipment, such as excavators and wheeled loaders.
“Dealers will buy equipment from LiuGong, and LiuGong will provide them with financing options to help them buy the equipment,” says Cassinelli.
He added, “Within the next five years, dealers should be able to manage a fleet of about 6,000 units.”
With these plans, LiuGong intends to become a significant player in the Chinese rental market with approximately 9,000 units in its Chinese rental fleet in the next five years.