U.S. Equipment Rental Industry To Top $32 Billion in 2013

Rental Rates

Nine months ended Sept 30*

*Sunbelt first quarter ended July 31

Companies are hard pressed to keep up with growth. As a result we saw massive capital expenditures in both of the past two years. Most of the companies have said they will continue adding to their fleets in 2013, however, the mix will be different. In 2011 and 2012 rental companies anticipated that demand for earthmoving equipment would come back before demand for aerials and lifting equipment. In both years rental companies changed the mix of their fleets toward earthmoving and away from platforms and lifting equipment. Billions were spent which greatly benefited the equipment manufacturers. 

Capital expenditures

(Millions of dollars)

Purchases of Rental Equipment

Nine months ended Sept. 30

Higher capital expenditures drove down the average fleet age of many of the national rental companies which has the added benefit of lowering their maintenance expenses. 

Average fleet age

Year ending September (Months)

*Sunbelt first quarter ended July 31

Rental company profits have benefited from a perfect storm. Rising demand for rental, increased rental rates and higher fleet utilization are all actors that have allowed companies to make huge investments in new fleet, which lowered their operating cost and increased their margins.

ebitda margin

Nine months ended Sept 30

*Sunbelt first quarter ended July 31

Rental locations increasing

We believe the U.S. equipment rental market for construction equipment reached approximately $28 billion in 2012. Based on the trends of the underlying markets, We believe the total market will grow to more than $32 billion in 2013. That forecast is based on our estimate that there will be approximately 14,000 rental locations in 2013 and the average revenues per location will be slightly more than $2.3 million.

United Rentals will probably close nearly 200 locations this year as it rationalizes locations obtained in its merger with RSC. In addition, it’s likely Ahern Rentals, which is fighting for survival, might be forced to close some branch operations. But we believe there has been significant growth of locations among independent rental companies that will cause the absolute number of branches to increase a little over 100 locations. While the absolute quantity of locations remains relatively constant, the revenues generated per location continue to increase.

Growth of the construction
equipment Rental market