Let’s Make a Deal

July 1, 2009
Equipment manufacturers are looking to stimulate equipment sales to the rental industry with offers too good to ignore.

Having just returned from a 2,009-mile round-trip road trip from Kansas to East Tennessee, this editor has seen first-hand that construction projects are in progress just about everywhere, from road work, to residential and commercial building. Sure, municipal budgets have been cut, new home sales have suffered and overall construction is down significantly, but there is still work being done, equipment in use and customers who need to rent. And for rental companies in need of updating a few items in their fleets, now is an opportune time to work with equipment dealers to make a good deal.

Deals to be had include interest-free, extended-term financing or other special financing terms, over allowances on trades, significant discounts on large orders, extended service plans, rental splits and many OEM-specific offers.

Fargo, N.D.-based Bobcat Co. has a wide range of offers and special programs available such as its recent 0-percent financing for 50 months incentive, a rebate on skid-steer and compact track loaders, and 0-percent financing for 42 months on attachments.

“Bobcat is always reevaluating the market needs and creating new special offers on its product lines, and recent product introductions, such as the M-Series excavators, to help customers get the kind of offer they need to outfit their fleet with a new machine,” says Bobcat marketing manager Greg Rostberg.

Perceptions on the availability of financing to rental companies vary from manufacturer to manufacturer, but many, such as Doosan, Deere, Terex, Ditch Witch, Volvo Construction Equipment and Caterpillar, say that credit is still available.

“Success rates for credit approval have not declined since the restrictions on capital were put in place,” says Rus Warner, Doosan Infracore Portable Power's manager of global air products. “The rental industry has been pretty solid.”

Other manufacturers such as Vermeer and Thompson Pump acknowledge that the availability of credit is tighter now than it has been in recent history.

“Capital expenditures are undoubtedly less during these times and there seems to be different trigger points to release capital,” says Jay Sunderman, senior global accounts manager for Pella, Iowa-based Vermeer Corp. “As in all market segments we serve, financing has tightened and the rental market is not immune. A supplier can add a lot of value to rental store operators if they can offer special terms or can offer, or help facilitate, assistance in financing.”

Ditch Witch offers incentives and financing all year long, including extended warranty service, special preferred pricing, rental splits, and 0-percent and low-rate financing. It is currently offering no interest until 2010 on vacuum excavation systems; a vacuum excavator lease-purchase opportunity; and 0-percent financing for 24 months on trenchers, plows, compact utility equipment, vacuum excavators and the Zahn line of equipment.

The company also has a Platinum Plus card for customers to finance parts, service, rental and accessory purchases at Ditch Witch dealerships. “Ditch Witch Platinum Plus cardholders can consolidate their monthly billing, manage expenses, get detailed account information online, and receive a variety of financing promotions,” says Ed MacGregor, manager of dealer and customer finance for The Charles Machine Works, Perry, Okla.

In addition, Ditch Witch Financial Services provides the Ditch Witch dealer network with financing options that include skip-payment plans, monthly-level plans, low-and no-financing, accelerated payment plans and rental purchase transactions.

Peoria, Ill.-based Caterpillar offers its dealers and Cat Rental Store customers the Cat AccessAccount, which lets dealers authorize the account and charge it upon the equipment's return, providing customers with an extended grace period before the payment is due (30-day billing cycle, plus payment due 25 days after the billing cycle).

Terex Financial Services has rolled out several financing options to address Terex's rental customers' cash flow needs during the economic downturn. Among those offerings is a 3 Month Skip Program that allows customers to choose the three-month payment skip period that best fits their needs. TFS also offers what it calls the Cash Flow Maximizer — a program that allows customers to choose three to four months annually where their payment is reduced to 1 percent of the original equipment cost.

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For Port Orange, Fla.-based Thompson Pump, a solutions provider for dewatering projects that require specialty equipment with engineered assistance, customer incentives are offered on a case-by-case basis.

“Because of the tremendous pressures we face to maintain or reduce price, in some cases [it] has limited our ability to offer across-the-board specials so we are working with our existing base and new customers on a case-by-case basis to structure something that works for both of our organizations,” says John Farrell, Thompson Pump, vice president of sales.

Thompson Pump marketing manager, Kirsten Peterson, suggests customers can also turn to the American Reinvestment and Recovery Act to learn more about tax incentives from the federal government designed to help equipment buyers achieve additional savings on their 2009 tax bill, allowing for more cash flow during the downturn. Details are available at www.depreciationbonus.org.

Offering a reward points system similar to what some credit card companies offer on purchases, Husqvarna Construction Products introduced its Payback Points reward program earlier this year. Rental company customers are rewarded with points when they purchase Husqvarna-labeled merchandise, and the points can be redeemed for thousands of products such as movies, music, books, jewelry, electronics and outdoor gear.

“This gives the contractor the freedom of selecting items outside the construction industry; on products that they need or that they just want to splurge on,” says Cate Stratemeier, marketing communications specialist, Husqvarna Construction Products, Olathe, Kan.

Good things come in packages

Despite the conservative level of buying in the marketplace, Vermeer says its dealership network is aggressively pursuing the rental market even though buying is at a very conservative level. “Factory-sponsored programs are in place and our dealers are a creative group when it comes to structuring packages that fit the needs of their local rental market customers,” says Vermeer's Sunderman. “We know that the rental market will not be down forever, and Vermeer is working to be positioned as a prime choice now and when the need for re-fleeting returns.”

John Deere dealers are also working closely with rental company customers to offer a wide range of packages to meet their needs at this time. “We've got the same strong, collaborative focus on working with rental companies as we've always had,” says Dave Garton, rental marketing manager for John Deere, Moline, Ill.

“We recognize that there's been a downturn, and the discussions we have with rental companies include a lot of ways to find low-rate financing or leasing options that fit the customer's needs. It's important, I think, to note that we still offer great programs; we haven't cut back in the rental market — not on staff, not on advertising, not on support for the ARA. John Deere is definitely sticking with the industry during this downturn; there's no retrenching.”

Aerial work platform manufacturer Terex Corp. is also working to provide sales incentives and enhanced customer service to stimulate sales and provide solutions for capital-stressed rental businesses.

“Our sales team is working actively with our customer base to understand their utilization patterns and help them with solutions to rebalance their fleet,” says Siva Balakrishnan, Terex AWP vice president of global services. “This includes offering trade packages to help them deflect their underutilized assets while adding high-utilization assets to their portfolio helping drive further top-line growth. We will continue to monitor the environment so that we can stay close to our customer base and offer solutions what will help them through this time of need.”

Terex's recently introduced Genie 360 is designed as a comprehensive suite of solutions focused on its customers' most pressing problems. One such solution is Terex Xtend, an extended service protection plan for Genie scissors, booms and telehandlers that goes beyond the company's standard warranty program, extending coverage on the electrical and hydraulic components of its products.

In addition, Terex has added Fleet Service Parts to its parts program to help customers buy parts for other manufacturers' machines, and to provide a one-stop shop for its customer base.

Like Terex, Statesville, N.C.-based Doosan Infracore Portable Power understands the importance of providing parts to the rental industry. “As rental stores are keeping equipment longer, replacement parts are very important in a downturn,” says Joe Jabbour, rental sales manager. “We're right on top of that one. I think the big thing for replacement parts is same-day shipments — a customer calls us for a part and we can get it out to them that same day, and we offer discounts to the rental industry.”

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In addition, Doosan continues to provide financing solutions to its rental customers as well as extended warranty programs to help cover equipment for nearly its entire lifespan in the rental fleet.

“For rental yards, warranty is critical because if it can cover the lifespan that it's in their fleet before they turn it, that just keeps their maintenance costs low and helps their ROI,” explains Warner.

Volvo Construction Equipment has also experienced more customer requests for special finance terms and extended warranties. “Extended warranties elevate the end-user's confidence level when purchasing used equipment,” says Allison Long, marketing & corporate communication manager, Volvo Financial Services North America. “We do accommodate customers based on their unique needs.”

Innovation rolls on

Rental companies looking for deals and special promotions should in many cases have to look no further than the mail box or the email inbox. Many OEMS report targeting their customers through direct marketing ads delivered either online or through the mail. Print and online advertising channels, as well as OEM websites and dealers themselves are also getting the word out about the latest incentives.

John Deere recently produced a mailing for its rental company customers designed to help them understand the return on investment that can be achieved when purchasing its skid-steers and compact excavators. The mailing explains the ROI, and includes an easy-to-follow ROI worksheet to demonstrate the return that rental stores can achieve when purchasing John Deere skid steers and compact excavators.

“The worksheet lets rental companies calculate the return based on average monthly rental, compared to average monthly payments and maintenance costs, to show the customer how good an ROI they really receive,” explains Deere's Garton.

“We're talking with our rental company customers about what kinds of things they can be doing to help their business during this downturn, too. We can help them with salesperson training, maintenance programs and the things that are harder to find time to do when business returns to being busy — this is the right time to do it.”

And while manufacturers are busy getting the word out to their rental customers about the abundance of special incentives available to them, they are also pressing forward with research and development on new products and innovations coming just around the bend.

“Vermeer is putting forth lots of R&D funds to ensure we have new product solutions ready for our customer base,” explains Sunderman. “These solutions will allow our customer base to engage in new emerging markets more efficiently at a lower cost of operation.”

Bobcat's Rostberg concurs. “Our product innovation has not slowed,” he says. “We are continuing to develop new models and improve older models despite the recent downturn. In 2009, we are launching nine new models that are basically ‘clean sheet’ design. We are fully aware that the economy will soon turn and we plan on leading the way to the recovery through American innovation.”

And in the meantime, there are hundreds of good ol' fashioned deals to be had.