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Growth in the UK equipment rental sector expected to continue, says the European Rental Association

Growth in the UK equipment rental sector is expected to continue in 2016, according to new research from the European Rental Association (ERA), the industry body. It estimates that turnover in the UK equipment rental sector will have grown 1.5% in 2015 to £5,679 million, and that growth will accelerate to 3.7% in 2016.

The figures come from the ERA Market Report 2015, which provides the most comprehensive data available on the European equipment rental industry. It is produced in cooperation with IHS, the source of information and insight.

Among other findings, the report highlights the way that improved logistics and planning have led to increases in time utilisation, a measure of efficiency that in rental is the proportion of days for equipment in rent versus the total workable days. In the UK, time utilisation is now at high levels overall.

The report also estimates that non-construction demand in the UK makes up 40% of sales, with the remaining 60% coming from the construction sector. This makes the UK’s non-construction share one of the highest in Europe.

Dick Buttigieg, VP, International Consulting, Economics and Country Risk at IHS, and leader of the IHS team which jointly produced the report with the ERA said: “This report is encouraging for the industry. It presents a positive outlook, and it reflects the way the equipment hire sector continuously improves its operations and service to customers. Improved logistics and planning are driving the industry forward.

“The relatively high demand from non-construction sectors in the UK is particularly encouraging. It shows that a wide range of UK businesses increasingly see the benefits of equipment rental in helping them operate more efficiently, which is good for the wider economy.”

Michel Petitjean, Secretary General of ERA, said: “The report shows how the rental sector is evolving. Equipment rental brings real benefits to business, and this is increasingly recognised across Europe.

“It allows 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 wellmaintained equipment on demand brings real benefits to the European economy and environment.”

Among the elements in the report is a summary of the UK economic outlook. It states: “Despite slower expansion in the first quarter of 2015, the economic fundaments look broadly positive for the United Kingdom, particularly for the consumer; we believe growth will be healthy during 2015 and 2016. Persistent low oil prices should keep UK inflation very low, thereby boosting consumer purchasing power along with strengthening earnings growth and rising employment. Due to this and other indicators, we expect the economy to expand 2.6% year on year (y/y) in 2015 and 2.6% y/y in 2016.”

The ERA Market Report 2015 contains a country-by-country analysis of 14 European countries. It includes detailed market size information for the years 2012-2015 and key ratios including fleet size and investment. It also includes penetration rates against countries’ GDPs, construction outputs and populations.

A special focus in the 2015 edition is on Germany. A dedicated chapter combines quantitative and qualitative information. In the context of this specific effort to examine the equipment rental market in greater detail, estimates have been established for the breakdown of rental revenues by product, by end market, and by channel to market.

The figures in the report are based on official statistics for NACE rev. 2 code 77.32: “Renting of construction and civil engineering machinery and equipment without operator”. This is the industry standard classification system used in the European Union.

The report contains 96 pages, with statistical information and expanded details per country. Each country section contains four pages of detailed information in local currency in order to better measure trends independently from the variation of the currency exchange rate against the Euro.