Rental Rolls

Sept. 28, 2010


The nation is split between regions where dealers anticipate "excellent," those that expect "very good," and those that anticipate "good" years. If it pans out, 2007 will be the fourth consecutive strong year.
About half of rental dealers maintained margins in 2006, and another 42 percent were able to increase them. Strong demand continues to facilitate such profits.
Rental dealers just barely fell short of the "excellent" year forecast for 2006, and even though the forecast for 2007 dips, business is still "very good."

Rental is on a roll. Although falling a bit short of expectations, rental dealers scored a "very good" 2006. This year, another "very good" prediction.

In our survey of members of the American Rental Association, rental dealers reponded resoundingly positive about 2006 and 2007. Seven of nine regions forecast "excellent" years for 2006; four of nine made it. The rest reported a "very good" 2006. For this year, two of nine forecast "excellent" and three "very good" for an overall prediction of "very good."

Sales volume increases exploded across the rental universe, with 56 percent of dealers citing significant increases in 2006. Take away the 7 percent who said volume decreased, and the net was 49 percent. Sales volume will continue to grow significantly this year, rental dealers say, although not as greatly. Only 35 percent cite significant increases for 2007, and 5 say volume will decrease significantly, leaving a net of 30 percent.

About 47 percent reported significant increases in short-term rentals. Other areas noted for significant increases were new-equipment sales and parts sales (35 percent of dealers), and service (30 percent).

With so much significant increases in revenue, dealers were able to boost margins on short-term rentals and, hence, profitability. About 42 percent of dealers reported increased margins on rentals last year.

Dealers were also able to increase rental rates, with 51 percent reporting such a move. For next year, 56 percent of dealers anticipate being able to boost rental rates to customers.

Competition in the rental market remains hot, with 20 percent of dealers calling it highly intense. Fifty-seven percent said increasing competition is a concern for them.