Dealers: Rent or Die!

Caterpillar dealers make up 16 of the RER 100, with 13 of those listed in the top 50.

In recent industry forums, traditional equipment distributors have been warned: “You are an endangered species unless you adapt to change.” And the primary survival mechanism, they've been admonished, is to become a short-term rental specialist. In plain and simple language: rent or die!

Caterpillar Dealers/Distributors
Company (Rank) Rental Volume (in millions)
Finning (14) $64.4
NC Machinery (20) $47.0*
Battlefield Equipment Rentals (21) $46.0
Wagner Rents (22) $44.0*
Ring Rents (23) $39.0*
Hawthorne Rent-It Service (32) $29.1
Kelly Tractor (33) $29.0
Mustang Rental Services (34) $27.5
Gregory Poole Equipment (35) $26.4
Peterson Rents (3) $26.0*
Louisiana Rents (41) $24.6
Butler Machinery (43) $23.6
Ohio Machinery (48) $21.0
Holt Group (57) $17.0
Americon (65) $14.0
Shepherd Rentals (71) $12.3
Total: 16 Companies $490.9 million
* estimate

A quick look at this year's RER 100 shows that many dealers took this advice seriously. Although the definition of what makes a dealer varies, we can safely say that more than 60 of this year's list are representatives of major manufacturers; at least half earn close to or more than half of their revenue from dealer-related activities such as equipment sales, service, parts and warranty support. Thirty-six of the RER 100 are dealers or distributors for Caterpillar, Komatsu, Case New Holland, or John Deere in some if not all of their market areas.

Leading the rental invasion has been — no surprise — Caterpillar. When Caterpillar chairman Glen Barton told an audience at the BAUMA equipment show in Germany in March that Caterpillar would become the “undisputed worldwide leader” in rental services, he knew that Caterpillar dealers were well on their way to making that prediction a reality. This year Caterpillar dealers make up 16 of the RER 100, with 13 of those listed in the top 50.

With these 16 Caterpillar dealers accounting for an estimated $490.9 million, it wouldn't be a stretch to suggest that the other 56 North American Cat dealers probably would more than double that total. Add worldwide rental revenues as Caterpillar develops and trains its international dealers in the rental concept and if Cat Rental is not No. 1 worldwide already, it soon is likely to be.

Although a number of Komatsu dealers have been rental specialists for a long time, the manufacturer has only begun emphasizing its importance for its dealers over the past few years. Komatsu dealers that have recently begun to emphasize rentals, such as Furnival Machinery and its FMC Rents division, have made strong strides. Many Case and Deere dealers have been strong in rentals for years and dealer/representatives of a wide range of earthmoving, aerial and access manufacturers are to be found at all levels of the RER 100.

And as if there isn't enough competition among the RER 100, another major manufacturer — Volvo — recently announced its intention to make a significant push into the North American rental market (see Industry News, page 30). Volvo Construction North America is planning to establish a chain of franchised construction equipment rental outlets. Current authorized Volvo dealers — and there are already several on the RER 100 — will have the first option to cover their territory using existing and new branches. Volvo hopes to find franchisees to cover other areas. The company has hired rental veterans to help develop and launch the program, such as Michael Farley, most recently president of Brambles Equipment Services and a veteran of more than 20 years in the rental business.

Industry insiders have long expected Volvo to make a serious push to expand its distribution capability into the rental market. It was rumored to have seriously looked at acquiring Neff Rentals not long ago, and industry observers expect a serious effort to quickly develop a strong rental channel.

Caterpillar, Komatsu, Case and Deere, and, of course, Atlas Copco — owners of the rental industry's No. 2 player Rental Service Corp. — have shown the seriousness of manufacturers to have a direct involvement with the rental channel. Most likely that trend will continue in the coming years and, despite the current slump in the market, manufacturers and dealers will continue to choose rentals rather than the alternative.

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Case Dealers/Distributors
Company (Rank) Rental Volume (in millions)
Briggs Equipment (16) $60.0
Western Power & Equipment (38) $25.5
Scott Construction Equipment (39) $25.2*
Trico Equipment (55) $18.0
CLM Equipment (67) $13.3
Total: 5 Companies $142.0 million

Deere Dealers/Distributors
Company (Rank) Rental Volume (in millions)
Sunstate Equipment (12) $133.0*
Nortrax (60) $16.0*
Smith Tractor & Equipment (74) $11.5
Nortrax South (78) $10.6
Rush Equipment Center (81) $10.0
Empire Equipment (96) $6.7
Total: 6 Companies $187.8 million

Komatsu Dealer/Distributors
Company (Rank) Rental Volume(in millions)
Contractor Rental/AIS (29) $34.0
Anderson Equipment (45) $22.5*
Roland Machinery (51) $19.2
Coneco Equipment (54) $18.2*
Mitchell Rents (59) $16.4*
Binder Machinery (63) $14.7
Furnival Machinery/FMC Rents (69) $12.5
Road Machinery & Supplies (72) $12.2
Road Machinery (85) $8.7
Total: 9 Companies $158.4 million

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