ARA Presents Key Research Findings

Enlarge Image Over the next year, the top priorities for rental company owners are growing the business, attracting new customers, maintaining current business/revenue, and managing cash flow.

February 23, 2005 • At the Rental Show in Las Vegas, Nev., the American Rental Association released key findings from the rental industry's first comprehensive state-of-the-industry research report. In partnership with International Communications Research, Media, Pa., ARA conducted the research for both the United States rental industry as a whole and by the three market segments • construction, general tool, and party/special event • to produce information on total revenues, inventory investments, potential challenges, and expectations for the upcoming years.

 

In 2004, revenue generated through equipment rentals is estimated at $23.8 billion for the industry, which is dominated by the $13.4 billion produced by the construction/industrial equipment segment. Last year the construction/industrial segment invested $20.9 billion in inventory. On an annual basis, the industry as a whole reinvests approximately $3.3 billion into new inventory with the construction/industrial equipment and general tool segments being the biggest contributors • $1.9 billion from construction/industrial and $1.2 billion from general tool.

 

During the last five years, the most common changes rental companies have experienced have centered around equipment and company growth, which included increasing inventories, sales, and customer bases. And, according to the ARA, many companies are now carrying different equipment than what they did five years ago. For the construction rental businesses, aerial work platforms and excavators have increased in popularity.

 

Enlarge Image The biggest challenges for growing rental businesses include staffing, competition, rising costs, and the uncertain economy.

Over the next five years, many of the same trends are expected • most companies see their businesses growing in rental revenue, customers, and inventory. Additional lines of equipment, more narrowed focus on certain types of customers, more locations, and more competition are a few changes expected in the upcoming years. Revenue potential for the industry in five years is estimated at $30.7 billion, which will be led by the party/special event equipment segment.

Companies expect the biggest challenges to be finding the right staff (25%), competition from national chains (18%), the rising costs of doing business (17%), and an uncertain economy (8%). Competition from “big box” stores also is a concern for those in the construction/industrial equipment and general tool segments.