The rental market has been experiencing solid growth for several years and some experts say rental is a necessity as consumer purchasing behaviors change and as margins continue to erode on wholegoods sales. Yet, some dealers are staying out of the rental market or only offering a limited inventory of rental equipment. To learn more, we asked dealers this question:
“If you’re not offering rental, what concerns are keeping you out of that market? If you are offering rental, what are the ‘must dos (inventory, marketing, processes, etc.) that make it possible?”
A: “We do offer rentals. To be honest, I don't think we have it right yet. I'd be interested in knowing some of the must dos myself. I know if you are going to offer rentals, it’s important to plan for the time it takes to promote, rent, inspect before and after, clean and maintain the equipment. It is difficult to come up with a competitive rate that actually covers that expense, not to mention the cost of the equipment itself. Don't go overboard on inventory to start, build it up.
“Marketing is tough. I suppose the best advice I can offer is promote heavy during the appropriate season and the rest of the time just keep it current on your website and in- store. And, don't forget to consider how the customer is going to get the equipment to and from your store.”
— Jason Bagniewski, D&D Farm Supply, Arcadia, Wis.
A: “There are always going to be obstacles and challenges with anything good. I feel like if we partner with the right companies and we run the rental division as we do our wholegoods division, and safety is first and foremost, we will handle that situation.
“I think it's a way to expand and it's a way to serve our customer. I have to be very cautious and careful. I don't want to compete with customers that are mine. We'll probably start out on the smaller scale on products and build up as we see what works.
“We have a lot of landscapers that would love for us to be in the business. Those are the ones we're asking, ‘What can we provide you with?’ Then, we have to also look at turning the products. When we get into it, we're going to go full force. We know we're going to go against some headwinds, but we have the best staff right now that we've ever had.”
— Sharon Killian Radke, Killians, Hickory, N.C.
A: “Rental is something that I have been urged to do, but have never taken the leap. We have kept a few implements thinking we would rent, but don't seem to. Some of the reasons are not knowing the rental business’s legal ins and outs, such as agreements, rates, theft, not returning an item, cost of owning the equipment, cash outlay, marketing/promotions, additional time and manpower necessary (we are already maxed out in the busy season), and keeping the items rented and not sitting around.”
— Scott Benko, Haltom Equipment, Mooresville, Ind.
A: “Years ago, we barely dipped our toes in the rental business. The positive side was when you took the equipment out of the rental fleet you would have a good piece of used equipment to sell. The negative was the hassle. You has to either get the customer to provide proof of insurance or sell them a loss damage waiver (LDW).
“Customers regularly do not treat rental machines very well and there were a lot of times you had damage. More times than not, the customer would debate it and you would be in an adversarial situation with a customer. If they provided their own insurance, getting them to file or getting their insurance company to work with you was difficult. If they purchased the LDW, you were still dealing with a deductible that is usually higher than the damage. Again, this was years ago and we have recently discussed dipping our toes back in.”
— Kelly Umphrey, Tulsa New Holland, Tulsa, Okla.
A: “At a farm equipment dealership, I have found one person should be responsible for rentals because salespeople are not strict enough. Machines should be inspected before delivery and upon return. The operator must be qualified. Someone needs to be responsible for cleaning and repairs upon return. Rentals are not a sideline. It can be profitable, but a pain if not done right.”
— Drew Williamson, Doughty & Williamson, Jarvis, Ont.
A: “There is a rental center less than a mile from the store. We supply this operation with rental machinery from time to time. We could possibly rent “farm machinery” type of equipment. Everyone wants it the same day, and if it rains, they want to keep extra time to make up for lost days of use. It’s extremely seasonal. We do try to help out local farmers with machines in the event of a major breakdown.”
— Gene Saville, Larry Romance and Son, Arcade, N.Y.
A: “We do not offer rental at this time although I think we will need to in the future. We are required to set up a separate entity for rental and we do not have enough staff to jump into the rental business with both feet at the current time.”
— Brice Terry, Terry Implement, Gallatin, Mo.
A: “We offer it only as a service to our customers when their equipment goes down. You absolutely have to have it with self-propelled forage harvesters. You will never make money doing it because when something that is front-row ready comes back filthy or with damage that you can't charge enough to cover. Generally, we only rent to our own customers.”
— Dan Faber, Faber’s Farm Equipment, Inwood, Iowa