Rental enters new era says Kaplan

By Murray Pollok14 February 2012

Dan Kaplan speaking at the ARA's Rental Show in February 2012.

Dan Kaplan speaking at the ARA's Rental Show in February 2012.

The North American rental industry is poised for growth as it enters a new phase of super-large rental companies said rental consultant Dan Kaplan at the ARA's Rental Show in New Orleans.

Mr Kaplan, speaking at a Rental Show seminar to a full-capacity audience of 120 delegates, said increases in rental penetration were fuelling the growth and that United Rentals' proposed acquisition of RSC heralded a new era in the industry.

"What we're seeing today is tomorrow's rental company", said Mr Kaplan, "They are driving it to a level that nobody has ever seen. In the past, time utilisation was up to the high 60s. Now it's in the low 70s, and with fleets growing in size. They are driving efficiencies like nobody ever saw."

Mr Kaplan said the United-RSC deal heralded a fourth stage in the development of rental in North America, following Sam Greenberg's truck rental business in the 1930s, Hertz Equipment Rental Co's creation of a national business in the 80s, and Brad Jacob's founding of United Rentals in the 90s.

"We are now in the fourth and most interesting stage of the development of rental", he told delegates. "People are driving efficiencies to new levels...it's going to force everyone in this business to re-evaluate what they are doing."

He forecast a new phase of consolidation in North America and said there was no reason why the biggest rental player shouldn't have a market share like the 26% enjoyed by Hertz car rentals in the US; "Why shouldn't the equipment rental industry look like that?" United's acquisition of RSC would give it a share of around 12% in North America.

Mr Kaplan said that small, independent rental companies had nothing to fear from the biggest rental companies because they were targeting a different customer. However, mid-sized rental companies would face challenges; "They will have different economies. The little guy is fine, but if you are competing with the big guys [it will be difficult] - they are buying better and disposing better."

In terms of future consolidation of the industry, he characterised Sunbelt and HERC as potential sellers or buyers, while Neff and NES were more likely to be acquired.

Asked about the impact of manufacturer-led rental operations, such as Volvo Rents and Cat Rental Stores, Mr Kaplan said he saw difficulties ahead for them in competing with the major rental players; "Can you be an efficient rental company? These bigger rental companies have expertise in every field - marketing, sales etc. Can a dealer/manufacturer give you the software, the assistance and the expertise to be able to compete?"

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