Few signs of French rental upturn as 3Q revenues fall 14%

09 November 2009

Changes in French rental revenues quarter on quarter. (Source: DLR, Paris.)

Changes in French rental revenues quarter on quarter. (Source: DLR, Paris.)

Rental revenues in France in the third quarter of the year dropped by 14% compared to the same period in 2008, according to the latest survey by French rental and distributors association DLR.

The survey also reveals that falling prices are becoming an increasing concern, with DLR's rental members citing increasing price competition within the rental sector as well as greater pricing pressures from their main customers in the construction market.

The price issue has arisen relatively recently: in the final quarter of 2008 only 3% of rental companies saw price as a key influence on revenues, but that figure had risen to 79% by the third quarter of this year.

DLR said; "There is no tangible sign yet of recovery in our sector...We can, however, take comfort in observing that the declines [in the third quarter] are somewhat weaker than the second quarter." The drop in revenues in the second quarter was 17%.

The survey revealed that rental leaders in France are concerned that lower prices will lead to further declines in sales in 2010, even if business volumes start to recover. The association said leaders had noticed little impact from the government stimulus package.

Expectation levels of market stabilisation in the fourth quarter have actually worsened since the second quarter, with 52% expecting the fourth quarter to be stable compared to 55% in the second quarter.

The one bright spot in the survey is the view from some that the lack of access to credit is limiting new investment in equipment by contractors. They conclude that if contractors' demand picks up then they will have to rent more equipment.

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