Rental does offer revenue opportunities if dealers are prepared for the competition and are ready to adapt to changing demands.
D&D Farm Supply of Arcadia, Wis., has been offering rental equipment for more than 20 years. It was a good addition for the dealership and the owner Jason Bagniewski thinks their rental department will continue grow. However, success is not a guarantee.
“We started rental to generate income and cash flow and it gets equipment that may be new or unique in front of customers. Stocking the right tractor can be a challenge when markets are what they are now, so sometimes, to get the price down on them, we put them in the rental program,” Bagniewski says. “There can be a lot of competition out there. In our area, there are three or four others offering tractor rentals. We don’t offer a major hardware line at D&D, but we do compete with local hardware stores on certain rental items.”
The dealership, which carries Kuhn, McCormick, Farm King, Vermeer, Fimco Industries and other lines, rents equipment for agriculture, commercial and residential landscaping and related industries. He says preferences and demand can change, especially based on the season. For instance, they used to rent log splitters but demand lessened as landscapers and homeowners can afford less expensive models that are now available.
Bagniewski looks at rate of return but says sometimes it’s a “gut reaction” to what kind of equipment to offer, how many units of each and how to set rates. “We usually like to get the first one paid off so everything’s profit after that point. It can be difficult to do that because sometimes you come to the end of the life of the equipment,” he says.
At D&D Farm Supply, rental is handled by the parts salesperson, including inspections after the equipment is returned. However, Bagniewski is rethinking that role. He says the new battery-powered equipment could bring in new customers and lessen hassles for the dealership related to servicing engines, replacing filters, etc.
“As far as robotic mowers, I don’t know if I can see a fit for rental yet, but it’s a growing area. People seem to have less and less time to mow their lawns,” he says.
Landscapers are also a solid market for rental because of their need to use equipment, such as snow removal equipment, for only a limited time each year.
“Our rental offerings will continue to grow and we’ll phase out products and bring new products in and keep trying to get better at it,” Bagniewski says.