Caterpillar promotes dealer rentals in Latin America

Caterpillar and its Latin American dealers held a conference in the Dominican Republic in early March to discuss rental opportunities in the region and to meet allied suppliers.

Cat used the meeting to encouraging its dealers to invest in rental - including the rental of non-Cat equipment from selected allied suppliers - and to provide opportunities for dealers to share their experiences on developing their rental businesses.

Chris Gustafson, Cat's rental and used division manager for the Americas, told IRN; "We want dealers to recognise that rental is critical to their success and our success. As rental penetration grows, it gets to a critical mass where you have to participate. We want to participate through our dealers."

Although Cat is encouraging dealers to create a dedicated and separate rental business including allied equipment, Mr Gustafson said Cat recognised that there would not necessarily be a "one size fits all" strategy and that it was the dealers that knew their own markets best.

However, he said dealers "throughout the Americas are buying into the need to be a leading force in rental...Currently Caterpillar dealers in Latin America have in excess of US$1 billion rental fleet and we would expect that to grow. Dealers have made significant capital investments and most have proven they are able to be very successful."

The meeting, held at a resort hotel in Punta Cana, attended by more 60 representatives from Caterpillar's dealers in the region as well as around 20 allied suppliers, was the first dealer rental conference held in the region since 2008.

It is clear that dealers are employing different strategies in developing their rental businesses. One of the largest, Sotreq in Brazil, for example, currently runs a 500-unit Cat earthmoving fleet as a separate rental business from its much smaller, 100-unit allied equipment rental operation.

Rogerio Paiva, who runs the construction rental business at Sotreq, told IRN that the two rental businesses were run separately because they still had different customers.

He said in the past Sotreq had tried to operate a combined allied equipment/Cat rental business, but that since 2005 the earthmoving rental operation had been moved back to run alongside the sales business, with a separate allied equipment rental business. He said both the earthmoving and allied equipment rental operations were now operating successfully.

Sotreq's allied equipment rental business is being run only in Rio de Janeiro, with a dedicated sales, marketing and maintenance team. He said he hoped that the success of this trial operation would encourage district managers throughout Sotreq to establish similar rental businesses. "It's a great success, with good ‘time out' of the equipment and low maintenance costs because we are using a third-party maintenance company." He said Sao Paulo would likely be the next city to establish an allied rental business.

Mr Paiva said Sotreq plans to expand its Cat equipment rental operation. Given the level of demand, he said it would be possible to double the size of the fleet in the next three years.

Other dealers successfully expanding their rental operations include MAQUINARIA, S.A. de C.V. (MAQSA) in Mexico and Haytrac in Haiti.

MAQSA opened its first Cat Rental Stores in 2004 and offers rental from nine branch offices in both its territories of Chihuahua and Durango. Ing Rito Ruiz, the company's sales manager, told IRN that both its Caterpillar and allied equipment rental businesses were going well and growing. "There are lots of mining companies coming to our area. That a reason for us to increase the rental fleet."

Meanwhile, Harry Cadet, who runs Haiti Rental - the rental operation of Haitian Cat dealer Haytrac - told IRN that its rental fleet was very large in proportion to the total Haytrac business, and had tripled in size over the past three years. In large part this is because of the amount of demolition and rebuilding work required following the earthquake in Haiti in January 2010.

"The rental division is the most important division in the company", he said, with around 130 cat units and the same number of allied supplier machines.

Mr Cadet said major rebuilding works in Haiti still had to wait for the completion of demolition activities, which were ongoing.

Allied equipment suppliers who also attended the Cat rental meeting in the Dominican Republic included Vermeer, JLG, Terex, Thompson Pump, Pioneer Pump, Allmand, Atlas Copco, Sullair, Multiquip and Ditch Witch.

A full report on the meeting will be published in the May-June issue of IRN.