The European equipment rental sector and its growth drivers

Equipment rental is a young sector in Europe. Some main growth drivers can be identified:

• A general tendency by contractors and industrial companies to increase outsourcing. Machinery and equipment outsourcing is fuelled by a number of factors: allows customers to allocate more capital to their core business, maintenance and repair costs are shared with several parties, better cost control, higher flexibility, convenient logistics, improved product safety, eco-efficiency and reduces compliance concerns.
• Rental related services also provide further growth opportunities for the equipment rental sector in the future. Developing added value services in rental related service areas will enable rental companies to take a broader responsibility in customers’ projects.
• In Europe, on average 30% of all new equipment is sold to rental companies, which is a low level compared to a mature rental market such as UK with an 80% rental penetration. As the rental sector continues to develop and equipment users begin to recognise the advantages of renting, rental penetration is increasing in most European markets.
• The equipment rental sector is still highly fragmented. In Europe there are some 14,000 rental companies specialising in renting without operators. The companies are mostly regional or local specialised companies with an average of 1.5 depots per company. The market downturn will be challenging for many rental firms. Ramirent aims to play an active role in the market consolidation and to act opportunistically, whilst maintaining a strong financial position.
  
• The construction volume per capita in Central and Eastern Europe is still at low levels compared to Western Europe offering long-term growth potential for the equipment rental sector in these markets.