ARA Projects Consistent Equipment Rental Growth Through 2019
The equipment rental industry will grow revenue 6.7 percent in the United States in 2016 and 2017, according to the latest forecast released by the American Rental Association. The industry will go on to growth of 6.2 percent in 2018 and 5.8 percent in 2019 to reach $48.7 billion, the projection says.
The growth rate is slightly more moderate than the previous two years, but the industry’s progress is consistently positive regardless of changes in the oil-and-gas industries, as well construction and other segments.
“The performance of the equipment rental industry since the recession has been very positive and as auxiliary industries recover and grow, we anticipate equipment rental revenue growth to meet the forecast of the next five years,” said ARA CEO and executive vice president Christine Wehrman. “The forecast also shows that many customers who have turned to renting equipment during and after the recession have seen the benefits and will continue to rent to control their costs. The secular shift to rental is here to stay.”
The analysis suggests that the ongoing rebound in real residential construction in 2015 will help fuel the growth in the construction and industrial equipment and general tool rental segments.
“A 2015-19 compound annual growth rate of 2.7 percent is projected for real total construction with real nonresidential growing 1 percent and real residential growing 5.7 percent,” according to the analysis provided by IHS Economics. “This will drive revenue growth in the construction and industrial segment and the general tool segment, which will average annual revenue increases of 6.5 percent and 6.7 percent respectively over the period.”
IHS predicts that the part and event rental will grow at a CAGR of 2.6 percent between 2015 and 2019, and total equipment rental revenue at a CAGR of 6.3 percent.
The short-term forecast for Canada is more modest for 2016, with expectations of 0.8 percent growth in equipment rental revenue to reach $4.98 billion, with a greater rebound of 5.7 percent in 2017, 6.3 percent in 2018, and 5.6 percent in 2019 to reach $5.9 billion.
“Lower oil prices will put some downward pressure on oil sands investment, but prices are expected to bottom out above the point at which oil sands become unprofitable and will rise steadily to over $80 a barrel by the end of 2018,” according to the analysis.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.