The rise of contractors renting construction equipment continues as they balance the cost of owning versus renting, according to a new survey by EquipmentWatch.
The new 2024 State of the Construction Equipment Economy report also shows that contractors still place a high premium on equipment ownership. The result is a constant balancing act in weighing the costs and trying to remain profitable in a landscape of slimmer profit margins.
“There is no doubt that the dynamic and multifaceted nature of decision-making within the construction equipment economy continues to keep many on their toes,” the report says.
The result has left contractors more often “balancing ownership with flexibility to adapt to changing needs and market conditions.”
Buying vs. Renting
EquipmentWatch
For example, loaders are more likely to be owned, while cranes are more often rented.
Here are some highlights from the report, based on surveys conducted in March, which can be downloaded here.
- 73.5% are more likely to use equipment they already own on a project.
- 74.5% have rented equipment in the past year.
- 44.3% said they rented equipment because it made more financial sense than buying.
- 75.9% said they rented because they needed the equipment for a short period or infrequently.
- 69.5% expect to maintaining current rental activity in the coming year.
- 9.5% plan to increase rental activity in the coming year.
- 40% of those planning to rent more are doing so because of increased project scope.
- 42.9% plan to rent less as they shift more toward ownership.
- 61.2% of new equipment is bought at dealerships.
- 26.2% of new equipment is acquired via auction.
End of Supply Chain Crisis?
The report indicates that the construction equipment market is “almost” over the supply chain struggles that began with the pandemic.
But a bigger takeaway is how equipment manufacturers learned to adapt to the supply shortages and reap record profits. They will continue to lean on those new supply sources in the face of inflation, trade disputes and other challenges moving forward, beyond the initial supply shortages of the Covid years, according to the report.
The report sees signs on the horizon for a steadier, healthier future for manufacturers getting the parts they need, thanks to the CHIPS Act, which focuses on U.S. semiconductor manufacturing.
The report also looks at future values for popular used construction equipment.
Overall, the report notes a drop in fair market value (resale) and forced liquidation value (auctions) over the past two years. Used wheel loaders and excavators have proved to be an exception, as they have experienced significant increases in prices and FMV.
To read the full report, click here.
EquipmentWatch is owned by Fusable (formerly Randall Reilly), parent of Equipment World. For more than 60 years, it has served contractors, equipment manufacturers, dealers, rental companies, lenders, insurers and government agencies in heavy civil construction. EquipmentWatch owns The Rental Rate Blue Book.
