Kaplan says learn from US rental slowdown

European rental companies should learn from the current slowdown in the US rental market and prepare by diversifying their fleets and customer base, said US rental consultant Dan Kaplan at the ERA’s annual convention.

Mr Kaplan said US rental revenues would decline by around 4% this year and capital expenditure would fall 36% compared to 2007. “Companies renting earthmoving equipment have been very badly hit. Companies renting aerial work platforms are doing well, until the fourth quarter of this year, when the jobs they are currently working on will complete…The US fleet mix is moving from earthmoving to aerial work platforms, but the move is too late.”

He said Europe’s rental sector would continue to grow, forecasting that the rental penetration rate in Europe (excluding UK) would increase from the current 32% to 45% in 2012, reaching over €31 billion in revenues. However, he called on Europe’s rental companies “to have a fully diversified fleet, offering earthmoving, compaction, air, power, AWPs – you need a diversified fleet.”

He urged renters to “focus on industrial and fragmented industries – RSC and Hertz in the US are very good at that. It’s good to have construction under 50% [of your business], or the high 40s. Get business from other, more profitable industries.”

Mr Kaplan renewed his prediction that other big manufacturers would own major rental companies, partly to compete with Caterpillar. “It’s just a question of time. How can you have one manufacturer out there not feeling the effects…you can’t let somebody else out there be unchallenged.”

There was also some caution against being too pessimistic. He said the financial crisis would pass in 2009, and argued that the US rental sector was better equipped to ride out the downturn than in the last crisis in 2001/2, because they were better managed and made full use of rental software. “The correction will not be like in 2001/2”, he said.