It’s Estimated that Rental Revenue will reach $41 Billion This Year
Get Your Piece of the Equipment Rental Pie
Equipment rentals are growing, in a significant way. Are you getting your share of that rental revenue?
The American Rental Association (ARA) reports that the industry showed impressive increases in 2013, and they say that’s no fluke. They project equipment rental revenue will see continuing steady growth.
The ARA produces a Monthly Rental Monitor that reports on industry statistics across North America. They say overall rental revenue totaled $38 billion last year — $33.3 billion of that in the U.S. and the remaining $4.7 billion in Canada. They expect this year to show total rental revenue of about $41.1 billion for the two countries.
How do those numbers break out?
The biggest gains in the United States were in construction and industrial equipment rentals segment, which racked up $22.3 billion. Next were the general tool segment, with $8.5 billion in revenues, and the party and event rentals segment at $2.5 billion. Viewed in a different way, construction and industrial equipment rentals increased 7.3% over the previous year, general tool rentals increased 5.3% and party and event rentals increased 2.8%.
Finally, it feels good again to be in that all-important construction and industrial segment. And the prognosis is encouraging. Industry analysts say they believe there is a fundamental shift underway, in which contractors are relying more on rentals rather then focusing on new equipment purchases. This is borne out by figures that show investment in rental equipment grew more than 10% from 2012 to 2013.
Once again, the construction and industrial sector topped the monetary charts, at $7.5 billion. Investment in the general tool segment totaled $3.2 billion. Experts say continued growth is a virtual certainty in the near term, especially for construction and industrial equipment rentals, which are projected to increase about 11% this year and an impressive 15.2% in 2015. After that, the growth rate will probably slow somewhat but continue to rise.
It’s a large and potentially tasty revenue pie for equipment dealerships that offer rentals as well as sales. But savvy managers will have to execute a strategic shift in their business planning to take advantage of marketplace changes.
How can you generate more rental income?
- You can follow the traditional method that requires your customer to provide a rental certificate. In this case, it’s their responsibility to contact their insurance agent to obtain the necessary certificate and get a copy for your files. This business-as-usual method is time-consuming for your customer and also your rental agent, which automatically means delay in finalizing rental agreements. That’s a productivity killer in every way.
- But there’s a smarter alternative. Your dealership can sell Loss Damage Waivers directly to rental customers. It’s quick and easy to accomplish, and you can charge a fee for the service.
Your customers won’t waste time having to obtain an insurance certificate, but they’ll get excellent coverage. You’ll generate additional income and establish yourself as the hassle-free dealership when it comes to equipment rental. That’s a substantial marketing plus in addition to boosting your bottom line.
Interested in learning more about how you can offer your own Loss Damage Waivers? At ADI Agency, we know insurance and we know construction. We’re just a call or a click away, with everything you need to streamline your rental insurance and get a larger slice of that growing equipment rental pie.