Progress report

29 February 2008

If you find anyone willing to predict with confidence the growth rate of rental over the next five years, even the next two, then please let us know. While the underlying conditions for growth are there in many areas of the world – the ongoing switch from ownership to rental, high levels of construction activity, the push to rental from major equipment manufacturers - other factors make forecasting extremely difficult. These include the state of the US economy and the knock-on effect in Europe, and the speed with which the switch from ownership to rental takes place, itself a complicated issue.

It is dangerous too, to talk in general terms about rental growth. Speaking to rental companies all over the world about their particular markets frequently throws up complications or anomalies. For example, in Romania, too much construction growth gives rental “no room” to grow, according to one construction professional in the country, while in South Africa the boost to construction associated from the 2010 World Cup is expected to lead to considerable rental opportunities.

Better numbers

If forecasts are difficult, at least the world's rental industry is becoming better documented. The American Rental Association (ARA) has invested heavily in creating statistics for the North American market - using consultant Global Insight - and now the European Rental Association (ERA) is following suit, with the same consultancy having been engaged to determine the size of the rental markets in around 15 European countries.

The ERA has already published a preliminary estimate of the total European equipment rental market for 2006 - €21.5 billion – and Global Insight is now preparing a more detailed study, with some results likely to be ready for the ERA convention in Amsterdam this June (coinciding with the International Rental Exhibition).

The tables on these pages give the best current figures for the world's rental market. Nearly all the figures relate to 2006 – the ARA's estimate for 2007 will be made public at the upcoming Rental Show in February.

Regional differences

What is clear is that rental continues to grow worldwide, although at widely varying rates. Of the more mature markets, Japan's biggest players are having to work hard to expand their businesses – don't expect any big growth here, although consolidation of the market continues. In the UK, a positive construction outlook means there is a consensus that the rental market will see annual growth of between 4 and 7% over the next three to four years. The 2012 Olympics will certainly provide a boost.

The US rental sector is undergoing a period of uncertainty: however, rental consultant Dan Kaplan, writing in the November edition of AEM's Advisor Rental newsletter, said he expected 2008 to see a “minor market adjustment” rather than a more serious downturn, and that “the larger rental companies are well suited to maintain strength in 2008”. United Rentals recent positive outlook statement for 2008 would seem to back up that view.

Statistics are fine, but the best way to gauge the health and development of individual markets is to talk to rental companies and construction equipment dealers on the ground. This is what we have done for a number of world rental markets, and the results are on the following pages.

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