RentalTracker shows improving confidence, in places

By Murray Pollok09 October 2013

There was a notable improvement in business sentiment among European rental companies at the end of the third quarter of the year as revealed by the latest ERA/IRN RentalTracker survey undertaken at the end of September and beginning of October.

The improvements were driven by the UK, the Nordic region and Germany, with Southern Europe, France and the Benelux countries remaining more subdued.

Overall, there were positive trends on fleet utilisation, business conditions now and activity levels for the third quarter.

Almost a third of the 220 companies who responded reported improving conditions at the end of the third quarter, a significant improvement on the second quarter. The positive balance of opinion – the difference between the proportions reporting improving or deteriorating conditions – improved to +13.4%, which is the first positive balance since the first quarter of 2012.

The ERA/IRN RentalTracker survey is conduced every quarter by International Rental News (IRN) and is a joint venture with the European rental Association (ERA).

The balance of opinion of fleet utilisation levels almost doubled to +22.4%. Almost 40% of respondents reported improving utilisation and just 17% were seeing utilisation levels falling.

Many rental companies were also seeing stable or improving activity levels for the third quarter: 35.6% reported higher revenues and 42% stable, with just 22.3% seeing lower revenues. The resulting positive balance of opinion of +13.4% is the highest since the second quarter of 2012.

There remains caution, however, illustrated by the subdued findings on staff recruitment, with just 22% of businesses expecting to add staff in the final quarter of this year. The vast majority, 65.7%, will maintain current staffing levels, and just 12% will reduce their workforces.

The positive balance of opinion on recruitment is +10.7%, which is slightly up on the second quarter of the year but essentially the same as most of the previous six quarters. You have to go back to the final quarter of 2011 to find a significant increase in recruitment plans.

While the aggregated figures for Europe point to an overall improvement in business sentiment, in truth this has been driven by certain markets alone, notably the UK, the Nordic region and Germany.

In particular, there has been a sharp upturn in business sentiment in the UK, where there was a remarkable +62% balance of opinion on current business conditions – in fact, no UK company reported worsening conditions.

UK companies were among the most optimistic for business a year ahead – 71% expecting improvements - and they were also among the most likely to increase fleet investment by more than 10% next year, with 40% planning to do so.

Spain, France and Italy all reported a negative balance of opinion on business conditions – in each country there were more companies reporting worsening than improving conditions – and the Benelux region also remains subdued, although at least with a +13% balance of opinion on business conditions.

Benelux companies were among the most cautious on fleet investment next year, along with France and Spain, and were least confident, after Spain, about business prospects for next year, with less than a third of companies anticipating an improvement. That compares to 49% for all respondents.

The Nordic region remains one of Europe’s most buoyant areas. Three quarters of respondents from the region are expecting further improvements next year; there was a +26.1% balance of opinion on current business conditions; and half were seeing improving fleet utilisation levels. However, companies in this region remain cautious on investment, with just 29% expecting to increase spending by more than 10% next year – which is almost the same as the average for Europe as a whole.

Multinational companies remain among the most confident, and are more likely to be reporting increasing utilisation levels (52%) and have more aggressive investment policies, with 50% expecting to increase spending by at least 10% next year (against an average of 30% for the whole of Europe).

Garman rental companies are cautious on investment and recruitment – near the European average in both measures – but are optimistic for the year ahead and also very positive on current business conditions, with a +36.4% balance of opinion (second only to the UK).

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