World Construction Today – The American Rental Association (ARA) forecasts significant growth for equipment rental revenue in the United States this year despite economic indicators being described as mixed and uncertain. However, the ARA is cautious about the effects of inflation and supply delays, which could result in higher rental rates for contractors in the construction arena.
According to a statement made last spring by Ph.D., ARA vice president for government affairs and chief economist, John McClelland, rental income grows as the fleet expands or when rates increase. Today, neither of these things are taking place, but supply chain constraints are preventing fleet growth and inflation is raising rates.
In the past, they had significant revenue growth, which they attributed to a growing fleet. As a result of rising rates, they are currently witnessing revenue increases, he said.
The most recent quarterly update of its five-year estimate projects that income from renting equipment, including the categories for construction and general tools, will increase 11.2% to almost reach $55.9 billion in 2022. More than $65.1 billion is expected to be generated through growth of 6.2% in 2023, 2.5% in 2024, 3.3% in 2025, and 3.7% in 2026.
According to the prediction, rental revenue for construction equipment would expand by 12.5% in 2022 to reach $41.6 billion, before dropping to 7% in 2023, 2% in 2024, 3% in 2025, and 3% in 2026. A 7.4% rise in general tool sales is anticipated in 2022, followed by consistent growth of 5% in 2023, 3% in 2024, 5% in 2025, and 5% in 2026.
Despite some challenges in 2022, rental revenue is still growing significantly, according to ARA vice president for programme development, Tom Doyle. The longer-term projection is still bullish but predicts lower growth than this year. Generally speaking, now is an excellent moment to work in the equipment rental sector.
In these times of more uncertainty, it is important to keep an eye on the forecast’s driving factors for changes that could affect when OEMs build their products or how much demand there is for rentals.
The remainder of 2022 and the prognosis for 2023 may be impacted by the persistence of high inflation, supply chain problems, labour shortages, and rising interest rates, depending on how long they persist.
Similar to the prediction for the United States, the ARA forecasts growth of 14.4% in 2022, $4.7 billion, 6% in 2023, 2% in 2024, 3.4% in 2025, and 3.3% in 2026 to exceed $5.4 billion. This forecast includes construction and general tool income.