The Rental business for construction Equipment has been an established trend in the Europe and developed nations and slowly this business model is developing in emerging markets, as contractors started recognizing the benefits of renting the construction equipment rather than owning the equipment.
International Rental News (IRN) magazine has published a special report called ‘Rewards of Rental’ for contractors and other users of construction equipment worldwide, which described the trend, benefits, business model, etc. of CE rental business.
IRN quoted Mr. Michel Petitjean, Secretary General of the European Rental Association (ERA) saying, “At ERA we also see growing recognition of the advantages that renting brings to businesses… these include more efficient use of capital, access to a wider range of equipment, expert maintenance and servicing, compliance with regulations, and improved sustainability performance. Intensively used, carefully chosen and well-maintained equipment on demand can bring real benefits to companies across the continent.”
European Rental Association (ERA) represents around 5000 rental companies in Europe, it said.
There are various advantages preferring the renting the equipment than owning the fleets, the renting help in reducing the huge capital investment on buying the new machine, it also helps the contractors to use the most modern/latest, safe and environment friendly construction equipment for the project without capital expenditure, it also helps in reducing the regular maintenance cost of your machine.
The well recognized rental companies do not only reduce your capital investment on buying a new machine, but also, they are most up-to-date with latest equipment ( it gives freedom to contractors to rent most suited equipment of the time for the project) and their fleet is always in good condition. Apart from renting equipment, many rental companies also provide other services such as Fleet management, Online rentals, On-site rental locations, Safety and training, Specialist equipment/ engineering services.
CE analyst Mr. Vineet Singh, Senior Associate Consultant- Market and Business Intelligence at Persistence Market Research told EOS in an interview, “ Due to high capital and operational costs involved, users find it more cost effective to rent equipment rather than buying a new one.”
European Rental Association points out the few benefits of renting construction equipment, which cited in the INR report, following are:
FINANCE: Fleets are not required all the time - Renting helps to avoid the burden of excessive investment, maintenance, and other costs. Renting provides you with the equipment when you need it and is more efficient than purchasing and watching your assets depreciate in value while they are not in use.
PRODUCT: You use it when you need it - The rental industry has specific products for specific jobs, leading to efficiency gains. Rental equipment is regularly maintained, ensuring you have high quality and reliable equipment on site.
SERVICE: You use it when you need it - Renting provides you and your business with flexibility, allowing you to rent for short, medium and long periods. Services include trained and experienced professionals operating the right machine for your job.
STANDARDS & REGULATIONS: Be safe, rent it and avoid the risk - The industry is well regulated and controlled, providing you with peace of mind. The outsourcing of product responsibility and legal compliance costs means that your risk is minimised.
SUSTAINABILITY: Rental minimises environmental impact - with increased utilisation efficiency and reduces investment by sharing equipment rather than owning. Rental gives permanent access to modern, efficient equipment. Rental reduces equipment transport costs by efficient logistics and the use of local rental fleets.
However, Indian rental market is still in a nascent stage, has to go a long way.
While talking on Indian rental market, Mr. Singh said, “Currently, in India, rental penetration is low compared to the global average. Limited numbers of organized players and lack of liquidity at their end, tax policies, and requirement of equipment ownership for tender qualification in certain government projects are some of the key factors found to have been restraining the growth of rental companies in the country.”
Major CE rental players in India are, Gemini Equipment and Rentals, Gemmco, Gremach, Quipo, Jindal Earthmovers and TIL.
Source: Information has been obtained from INR & ERA