Elevated equipment inventories, especially in the construction and material handling sectors, are contributing to growth in the equipment rental market.
As equipment dealers, rental houses and customers navigate the used-equipment market, the pressures from increased inventories provide the opportunity for rental and leasing growth, Brian Rosa, president of commercial finance at Mitsubishi HC Capital America, told Equipment Finance News.
“The flexibility of short-term leases and equipment rental opportunities are definitely helping organizations take advantage of higher inventory levels and use new technology without a large payment or significant operating expense,” he said. “We’re seeing a lot of it in the used-equipment space right now.”
The Federal Reserve decision to hold interest rates steady at its January meeting should also contribute to increased rental activity, Rosa said.
“There’s a lot of good used equipment out there in the market, and, especially when interest rates are high, rent and used equipment on a short-term basis solves customer demand almost instantaneously and often for a fraction of the costs,” he said. “I expect there to be an increase in rental-based financing structures this year as the industry copes with high inventory levels.”
Bonita Springs, Fla.-based Herc Rentals’ rental revenue reached a record $3.2 billion in 2024, up 11.1% year over year, according to its Feb. 13 earnings statement. Meanwhile, Ashtead Group, parent of Sunbelt Rentals, posted equipment rental revenue of $7.6 billion for 2024, up 5% YoY.
Lift, skid steer inventories
Increased inventories in the lift and material handling sector, including a 35.4% increase in rough terrain scissor lift inventory, is likely to continue in 2025, Sandhills Global Equipment Lease and Finance Manager Jim Ryan told EFN.
“We’re seeing it, and obviously that lift side and material handling side as a whole, we’re going to see that continue to grow,” he said. “There’s a lot of inventory that’s going to keep ramping up, so it’s a good time for buyers on that side of things.”
While used mini excavators saw a month-over-month decrease in inventory of 2.4%, the used track and wheel skid steer categories increased 12.5% YoY. Those categories led the medium-duty construction category among Sandhills’ auctions, Ryan said.
“We’re going to see these month-to-month changes up or down, but we’re still pretty high year over year, and that track skid steer market is very favorable in the rental fleets,” he said. “We’ve talked about that before, year over year, so you see that volatility on the track side probably more so than anything else in the medium-duty construction side of things.”
The North American rental market will reach $94 billion by 2027, a 22.1% increase from 2023, Ashtead Group forecast during its March 4 earnings presentation.
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