Just a Stumble?

Sept. 28, 2010

Overall, rental dealers expect a "very good" 2008. Northern Plains continues to report and expect the most positive business, joined by the Mountain region. Yet some softening is seen as four of the nine regions forecast "average" this year.

Margins held for more than half of rental dealers last year, but the percentage who reported lower margins is up from only 9 percent in 2006 to 15 percent in 2007. Even so, one-third of dealers reported higher margins last year.

Although the year turned out "good" instead of "very good," rental dealers' expectations are dampened only slightly. This year, "very good" is back in the forecast.

Although business ratings have declined over the past couple of years, the peak rental dealers had attained was the highest rating available. Rental dealers remain optimistic.

Our survey was done with the assistance of the American Rental Association and its members. Respondents reported a year that fell short of their expectations for 2007, having forecast that business would be “very good.” Projections call for 2008 to be “very good” despite 2007 dipping to “good.”

Sales volume increased significantly for 41 percent of rental dealers in 2007. About 16 percent reported significant sales decreases for a net of 25. For 2006, the net was 49. Six of 10 respondents say 2008 sales volume will stay steady; 32 percent say volume will increase and 7 percent say it will decrease for a net of 25.

The largest increases reported were in short-term rentals (38 percent of rental dealers) and service (38 percent).

Margins decreased as sales tapered from the strong markets of 2005 and 2006. Short-term rentals returned about the same margins for 52 percent of the rental dealers. One-third reported margin increases, with 4 percent reporting much higher margins in 2007 compared to 2006. About 16 percent reported margins lower.

Rates rose for 39 percent of rental dealers, and 7 percent said rates decreased. Although a similar percentage forecast rate cuts for 2008, 54 percent anticipate being able to boost rental rates this year.

The No. 1 business concern for 2008 is economic recession, identified by 36 percent. Other “pressing” concerns are declining construction markets and increasing competition.