Forecast Projects Stable Future Growth for Equipment Rental Industry

Rental penetration dips slightly in 2015 due to energy market changes

MOLINE, Ill.--()--The equipment rental industry is poised for stable growth over the next few years, according to the latest forecast released by the American Rental Association (ARA), which calls for total rental revenue increases of 6.6 percent in 2016 and 5.6 percent in 2017.

The forecast reflects the downward shift of investment in energy markets and continued growth in residential and nonresidential construction.

“There is no doubt that the secular shift to renting equipment continues in the markets those in the equipment rental industry serve. Many customers continue to take advantage of the benefits that equipment rental offers,” said Christine Wehrman, ARA’s CEO and executive vice president.

“Rental companies also are adept at identifying customers and relocating equipment to different areas to take advantage of increased demand. This is a dynamic industry that continues to have a bright future for revenue growth,” Wehrman said.

ARA’s latest forecast, with data compiled by IHS Economics, one of the world’s most respected economic research firms, shows an even stronger story for the growth of the equipment rental industry because revenue totals have been revised upwards to reflect the latest data recently released by the federal government from the 2012 U.S. Economic Census.

The industry’s new U.S. total rental revenue figures in 2009 through 2012 also impact the totals for 2013 through 2015 and the numbers forecast for 2016 through 2019. According to the revised figures, total rental revenue — including construction/industrial, general tool/homeowner and party/special event — in 2012 was $36.5 billion compared to the previous estimate of $31.3 billion. The forecast for 2016 is now $48.2 billion and up to $53.7 billion in 2019.

“Large revisions in the Economic Census are not uncommon since it is conducted once every five years and has a 100 percent sampling of U.S. companies,” said Scott Hazelton, managing director, IHS Economics. “The lack of frequency allows for changes in an industry to build up and the 100 percent sample is far more robust than any other government data project.”

The changes in total rental revenue in the U.S., however, have not impacted expected growth rates forecast by IHS Economics. “The residential construction market is expanding and, in some markets, housing literally cannot be built fast enough and new home prices are rising. Nonresidential construction also is growing strongly. Commercial construction growth will fall from double digits to high single digits, but remains fundamentally strong,” Hazelton said.

“The passage of the Highway Bill has improved the outlook for infrastructure-related spending for the first time since the stimulus package of 2009. These considerations bode well for construction/industrial and general tool rental,” Hazelton said.

Rental penetration, however, decreased slightly in 2015 to 52.9 percent from 2014’s 53.9 percent, according to the latest ARA Rental Penetration Index™. “Rental penetration is measured as the share of the U.S. construction equipment fleet accounted for by rental companies. Rental penetration will decrease if rental companies acquire fleet slower than contractor-owned equipment or if they divest fleet faster than contractors,” Hazelton said.

“In the Great Recession, the latter was the case. In 2015, it is the former rationale that prevails. The story in 2015 was that construction markets were hot and energy markets were not. Equipment required for shale oil exploration was no longer in demand, yet much of this equipment was well-suited for construction. For a rental company that supplies equipment to both industries, the solution was to defer some purchases of new equipment for construction sites and redeploy their existing assets from energy to construction,” Hazelton said.

“Fleets still grew in 2015, but at a slower rate, while the investments by contractors remained unchanged. The result is a mild dip in rental penetration that indicates the flexibility of the industry, not any weakness in the outlook,” he said.

About ARA: ( The American Rental Association, Moline, Ill., is an international trade association for owners of equipment rental businesses and the manufacturers and suppliers of construction/industrial, general tool and party/event rental equipment. ARA members, which include more than 9,700 rental businesses and nearly 1,000 manufacturers and suppliers, are located in every U.S. state, every Canadian province and more than 30 countries worldwide. Founded in 1955, ARA is the source for information, advocacy, risk management, business development tools, education and training, networking and marketplace opportunities for the equipment rental industry throughout the world.

About IHS: ( IHS (NYSE: IHS) is the leading source of insight, analytics and expertise in critical areas that shape today’s business landscape. Businesses and governments in more than 140 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs approximately 8,600 people in 32 countries around the world.

IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. Copyright © 2016 IHS Inc. All rights reserved.


American Rental Association
Tom Hubbell, 800-334-2177, Ext. 248; 309-277-4248

Release Summary

The equipment rental industry is poised for stable growth over the next few years, according to the latest forecast released by the American Rental Association (ARA).


American Rental Association
Tom Hubbell, 800-334-2177, Ext. 248; 309-277-4248