Sales of new construction equipment have been on an upward trend in recent years, but the rapid growth of rental has been eroding some of that acceleration, according to the Equipment Leasing & Finance Foundation's 2018-2019 Vertical Market Series report on the construction segment.
Equipment distributors and rental companies reported growth in rental volume based on recent research by Wells Fargo. “What we expect from the rental industry is they will increase the size of rental fleets, as they’re saying demand for rental will continue to grow. But as a result, there probably won’t be a significant ability to put higher prices out there,” explained John Crum, head of the construction group at Wells Fargo.
The high prices of equipment to meet emission regulations is one of the primary drivers for construction equipment rental, according to recent analysis by research firm Technavio. With Tier 4 regulations now a reality, manufacturers have been forced to design and produce engines that comply with stricter emission regulations. Various technologies that have been integrating into new equipment include diesel particulate filters (DPF), diesel exhaust fluids (DEF), and selective catalytic reduction (SCR). The incorporation of SCR technology, in particular, is costly and these other new technologies require frequent replacement, driving up maintenance costs and making a stronger case among contractors to go with rental equipment options.
And in another area of development within the rental equipment space, equipment dealers, and rental houses have begun partnering with the majority of online equipment services as a way to reach customers in a faster, more direct manner. For example, peer-to-peer equipment rental services like Dozr, EquipmentShare, and AnyQuip have tapped into a previously closed revenue stream for contractors, allowing them to rent out their idle machines to other contractors with just a few taps of their mobile device.