French renters facing flat 2010

04 December 2009

The audience of French rental managers at the DLR's rental conference in Paris on 3 December.

The audience of French rental managers at the DLR's rental conference in Paris on 3 December.

The French rental market is unlikely to see any significant recovery in 2010 with revenue growth stalled and downward pressures on pricing, according to the president of the DLR's rental group, Hervé Cohade.

Mr Cohade, speaking to over 200 delegates at the association's annual rental meeting in Paris, said that after an 8% decline in revenues in 2008 the decrease in 2009 would be nearer to 18%, and that 2010 offered little prospect for a return to growth.

Some renters at the event reported less severe falls in revenues, but there is little disagreement that the decline this year has approached the 15% mark.

Mr Cohade said renters in France had to adapt to the new conditions and warned that it would be difficult to get rental prices back up to pre-recession levels. "Before the recession, our rental prices were higher than other countries", he said, "and on the other hand, our invoicing for things like insurance and transport is weak."

He said French rental companies would need to reduce their costs and run their businesses more like renters in the US and UK, where prices are lower. "The quality of depots in France is high, and it's a cost. The density of our branch network is high", he said.

He asked, for example, if French rental companies could afford to have full time sales staff in the branches and also on the road; "If we want to make business with lower rental rates, we have to consider these matters."

Informal discussions with rental companies at the Paris meeting revealed that many companies in France will do little more than break-even in 2009, although there are signs that rental prices have stabilized after falling for much of 2009. It is also likely that profitability levels in 2010 will benefit from reduced depreciation costs following a year of low capital investment.

Many of France's bigger rental companies have reduced their fleet sizes, including Loxam. However Mr Cohade said it was still too early to say if this de-fleeting was sufficient to stabilise utilisation rates and rental prices in 2010.

The downbeat atmosphere of the meeting was not improved by some less-than-optimistic forecasts on French building and construction activity in 2010.

Nicolas Leleu, director of economic affairs at FNTP (the national federation of public works), told delegates that there would be an overall 0.5% fall in volumes in 2010, with spending by local government and private sector businesses falling by 1.5% and 2.0%, respectively.

Similarly, Eric Quinton, an economist with FFB, the French building federation, said total building volumes in France would fall by 3% in 2010 after a 7% decline in 2009. He forecast that the French building sector would see a further 30000 fall in employment levels during 2010, the same reduction as in 2009.

Mr Cohade also said that the rental sector needed to exploit the increased focus on sustainability and environmental issues. He said rental companies needed to promote ‘green' equipment to their customers, and more generally promote the positive role that rental can play in reducing consumption and carbon emissions.

"Rental is a pure green concept", he told IRN, "and we have to communicate a lot about that." He said he wanted DLR to lobby the French authorities about tax benefits for rental companies based on their beneficial impact on the environment.

Latest News
Access Alliance welcomes Plantool
Plantool joins UK and Ireland rental alliance at Belfast meeting 
Partnerlift takes on SIM-Tec
Rental, sales and service company expands cooperative’s presence in Rhineland
Venpa acquires LocaTop
Investment continues group’s fast expansion in Italy