he American Rental Association (ARA) plans to unveil the latest results from the ARA Equipment Rental Penetration Index™ during The Rental Show 2014 in Orlando, Fla., scheduled for Feb. 9-12.
ARA introduced the ARA Equipment Rental Penetration Index at The Rental Show 2013 in Las Vegas as the association’s latest step forward in defining and analyzing the equipment rental industry. The initial results, covering 2003-2011, showed rental penetration for construction machines reaching 51 percent in 2011, up more than 10 percentage points since 2003.
The results to be revealed at the show in 2014 will cover 2004-2012.
Christine Wehrman, ARA’s executive vice president and CEO, says equipment rental companies are interested in understanding equipment rental penetration because it is a measure of how much potential market exists versus the current market.
A relatively low level of rental penetration could suggest a significant opportunity for rental firms to expand their business while high levels of rental penetration may indicate a relatively saturated market that will only expand at the rate of overall fleet expansion.
“The basic concept of the ARA Equipment Rental Penetration Index is to measure the amount of equipment that is rented as a percentage of total construction equipment,” Wehrman says.
At the request of ARA members, ARA convened a workgroup in September 2012 to develop a plan of work for estimating an appropriate measure of equipment rental penetration for the equipment rental industry. The workgroup built upon ARA’s development of rental-specific performance metrics to determine a way to calculate rental penetration that combines several factors to result in the ARA Equipment Rental Penetration Index.
The result is designed to provide the industry with a new method for measuring and forecasting equipment rental penetration and leverages the ARA Rental Market Monitor™ and the expertise of the association’s industry research partner, IHS Global Insight, as the foundation.
The ARA Equipment Rental Penetration Index is another market performance metric that combined with the ARA Rental Market Monitor and ARA Rental Market Metrics™ can help rental companies determine financial performance and potential.
“The equipment rental industry continues to evolve and increase the level of professionalism. We believe these tools developed by ARA can help all rental stores better tell the industry’s story in a way that bankers and investors can better understand,” Wehrman says.