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Global rental market: slowdown or continued growth? Murray Pollok, Managing Editor International Rental News
Global rental market:slowdown or continued growth?
Murray Pollok, Managing EditorInternational Rental News
Summary
• Uncertainty• Construction & construction equipment• Rental market• Access market
Uncertainty
• Oil prices
• USA-China trade dispute
• Brexit
Construction markets• US construction still reasonably strong, but overall USA GDP growth softening
• Few signs of imminent slowdown. “The outlook is still positive”: IHS Markit.
• Europe construction growth around 2.0% in 2019, 2020 and 2021: “moderate growth with a slowing trend” (IHS Markit). Residential strongest sector, but growth rate is falling.
• Middle East: Middle East construction markets recovering and improving. Qatar will maintain high level this year and 2020; UAE +6-7%, Oman & Saudi Arabia at +4%. Kuwait less than 2% growth.
• China: healthy construction growth of around 6% forecast this year and next
• Latin America: higher regional GDP growth in 2019, and construction spending will recover, but below global rates (IHS Markit).
Global construction equipment sales
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
*20
19*
2020
*20
21*
2022
*
China Europe India Japan North America Rest of the World
Source: Off-Highway Research
European construction equipment sales
0
50,000
100,000
150,000
200,000
250,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
20172018*2019*2020*2021*2022*
Average 2018-2022*: 157,318
Average 2013-2017: 133,671
Source: Off-Highway Research
N American construction equipment sales
0
50,000
100,000
150,000
200,000
250,000
300,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
20172018*2019*2020*2021*2022*
Average 2013-2017: 166,956
Average 2018-2022*: 230,793
Source: Off-Highway Research
China construction equipment sales
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2020* 2021* 2022*
Average 2013-2017: 212,191
Average 2018-2022*: 276,962
Source: Off-Highway Research
What about rental?
Rental trends
• US$90 billion global market: the trend is going one way
• Rental penetration continues to grow in North America (53.5% - ARA)
• Benefits of rental widely recognised and being heavily marketed by large, sophisticated rental companies
• Longer term trend towards ‘sharing economy’ will benefit rental (ERA study underway)
• Access pioneering rental in new markets (eg China)
• Top 10 rental spenders globally invested around €4.5 billion on fleet in 2017 (IRN100)
Rental Trends – North America
• North America continues to perform strongly:
• 5.3% growth in 2019 (ARA)• 4.8% in 2020, 5.0% in 2021, 4.8% in 2020• Consolidation: top 10 represent 30% of market (scope to be higher)
“We see good end markets, and on the ground we continue to see growing backlogs…sure the pace of growth will at some point and inevitably slow. We just don't believe there is evidence of that being anytime soon.”
Brendan Horgan, COO, Ashtead Group
6.3%4.5%
4.1%4.0%
3.7%3.9%
3.5%3.4%3.4%
1.7%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%
Poland
Norway
Sweden
Italy
Netherlands
Germany
France
Europe
Spain
UK
Europe: Forecast Rental Growth 2019
Source: European Rental Association/IHS Markit (2018 Market Report)
What about access?
Crawler excavators, 40%
Wheeled loaders, 15%
Mini excavators, 10%
MEWPs, 9%
Crawler dozers, 4%
Telehandlers, 4%
Backhoe loaders, 4%
Wheeled excavators, 3%
Articulated dump trucks, 3%
Skid steer loaders, 2%
6%
Total:US$97 bn
Global market value in 2017 ($ billion)
Current access market
• OEMs enjoying a buoyant period:• Terex in 2018 – up 24%• JLG – up 25% (to Sept ‘18)• Haulotte - up 14%• Skyjack – North America up >15%, Europe up 5-15%
• Terex AWP investor presentation: “Steady long-term expansion anticipated…Demand above 2018 levels expected through 2023”
Current access market• Haulotte expecting 10% revenues growth in 2019.
• China is a hotspot (+20% annual growth, and fleet already more than 60,000 units):
• Currently as big a sales market as Japan or Australia?• Dramatic fleet predictions
• Big Asian rental companies from Singapore, HK and Japan expanding in Asia and China.
Access fleet data
Global fleetNorth
Americanfleet
Europeanfleet
Asia Pacificfleet
LatinAmerican
fleetFleet size 1350000 651000 280000 290000 48000Top 5 share 26% 49% 40% 30% 24%
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
Source: IPAF/DuckerFrontier & Access International
IPAF/DuckerFrontier – Europe in 2018/192018• European MEWP rental growth: around 6% (similar to 2017)• Southern Europe: >10%• Germany/France/Italy/NL: 5-10% growth• Nordic countries: moderate growth (pricing pressure)• UK: growth slowed (1-2%) (pricing pressure, focus on renewal)
2019• Uncertainty in 2019, difficulties in 2020?• Growth of MEWP rental less than 5%
Source: IPAF/DuckerFrontier (2019 market reports to be published soon)
IPAF/DuckerFrontier – USA in 2018/192018• USA fleet growth: 7% (>600,000 units)
• MEWP revenue growth >10% (rates & utilisation both up)
• Fleet increase is main growth driver
2019/2020• Similar growth anticipated in 2019, but uncertainty increasing
(elections in 2020)
• Rates improved in 2018 and expected to remain good in 2019.
Source: IPAF/DuckerFrontier (2019 market reports to be published soon)
Final comments
• Rental growth exceeding GDP growth in most markets.• Prospects remain good for USA rental market, but waiting for a
slowdown.• Access rental fleets growing in Europe, but softening.• Explosive growth in China. Scale of opportunity is enormous.• Prospect of decades of access growth in emerging markets.• MEWP rental in Europe/USA growing faster than general rentals
market.
Thank you
Murray Pollok, Managing Editor, International Rental NewsE-mail: [email protected]: +44 (0)1505 850043
