Good Outlook for the Rental Market Room for Growth in Emerging Countries
The rental business for construction machinery is expanding, mainly in developed countries like Japan, Europe and North America. According to a survey of Hitachi Construction Machinery, the market had reached some 2.9 trillion yen in Europe, about 4.9 trillion yen in North America and about 1.4 trillion yen in Japan in 2018, so the estimated market size exceeds 10 trillion yen. Over the past 30 years, the ratio of deployment to rental companies out of all construction machinery has increased to about 50% in developed countries. Recently the market has seen rapid growth in China as well, and if the rental ratio in emerging countries like China, India and Southeast Asia rises to the level of developed countries in the next 30 years, the market is expected to grow to some 30 trillion yen.
Mr. Ohwada of the Used Equipment & Rental Business Planning Dept. commented on some of the background to the development in construction machinery rentals to date.
He said, “In developed countries, there are a lot of short-term jobs in urban construction and it can be difficult to secure year-round work, such as large-scale civil engineering. Since construction machinery is not operated heavily in the region, the trend has shifted to rentals as they can be used only when needed and financially efficient. Exhaust gas regulations are getting stricter year by year, especially in Europe, so the latest models of construction machinery have a high turnover. However, it is not practical to replace machines frequently, so the number of customers who prefer rentals has increased.”
Similarly, renting has proliferated in the United States due to its great land mass and the consequent high cost of transporting machinery. In recent years, sharing services that allow online reservations, applications and payment for construction machinery have begun to spread and they are likely to expand going forward.
On the other hand, what is the situation in emerging countries like? Mr. Inoue of the Used Equipment & Rental Business Planning Dept. addressed that questions as follows. “Currently, the trend toward long-term rentals is common in emerging countries. Rentals in developed countries tend to take the form of dry rentals for which only the machine is rented. By contrast, wet rentals are the norm in emerging countries, as operator skill is not as well developed. We anticipate the demand for wet rentals to increase all the more in line with increases in population and construction work in emerging countries.”