The construction equipment rental market - France

1.2 A growing global market

The global construction equipment rental market:

The global construction equipment rental market is estimated at US$ ** billion in ****, and is expected to grow at a rate of around *% through to ****, reaching US$ *** billion.

Sales in the construction equipment rental market World, ****-****, in billions of US$ Source: MarketsandMarkets CAGR **** - ****: approx. *%

Growth is expected to be driven in particular by major global infrastructure projects, in both emerging and developed countries. Asia is a particularly buoyant market: China's immense "New Silk Road" infrastructure project is a good example. [***]

NB: these figures do not take into account the Covid-** crisis, which should affect growth in ****.

Leading market players according to the IRN **** ranking

The most important players in the equipment rental market are represented in the table below, with a particular focus on the place of the French in the global market[***]

A booming European market:[***]

With **% growth between **** and *****, equipment rental for the building and civil engineering sector has enjoyed good momentum. This growth can be explained by the fact that players in the building and civil engineering sector increasingly prefer to rent equipment rather than buy it.

Construction equipment rental is growing faster than construction and GDP Europe, ****-****, in growth ...

1.3 A growing French market

According to DLR, a federation of players in the distribution, rental, maintenance and services sector for construction and handling equipment, the construction equipment rental market is estimated at €*.* billion in ****, up *% on ****.

The graph below shows different periods:

A CAGR of *.*% between **** and **** A drop in activity after the **** crisis, following several years of growth A sharp upturn in growth in ****, with a CAGR of *% between **** and **** A particularly dynamic ****, with almost **% growth

Construction equipment rental sales France, ****-****, in € billions Source: ****

Major cities and coastal areas are experiencing stronger activity than rural areas or small and medium-sized conurbations. In ****, the number of orders fell slightly. [***]

1.4 The impact of the Covid-19 crisis

The impact of the crisis on construction equipment rental players:

According toInsee, average sales at end-November **** for players in NAF code **.**Z 'rental and leasing of construction machinery and equipment' were ***.* in index base *** ****, compared with ***.* at end-November ****. This accounts for a *% drop [(***). We note that while activity has fallen in **** - it remains **% higher than in ****.

The graph below highlights the month-by-month breakdown - with a sharp drop between March and May ****.

Comparison of construction equipment rental sales between **** and **** at end-November France, ****-****, index base *** **** Source: ****

According to DLR, rental business was at **-**% of its "normal" level between mid-March and the end of May ****. Business then picked up again for the most part, but with additional difficulties linked to barrier gestures.

In an interview with the CEO of Loxam and the Chairman of Kiloutou, Le Moniteur Materiels reports on the post-Covid challenges facing the construction equipment rental industry:

investment amounts will fall, as demand will be lower the trend was already for a slowdown in activity - particularly with the electoral cycle (***) - but the drop in activity will be much sharper than expected. the future depends on the stimulus plan and the role of construction and public ...

1.5 A new demand trend: long-term rental

Construction equipment rental is primarily a short-term offer, ranging from a few days to a few months. A new demand is emerging: long-term rental. Following on from the development of this business in the truck market, where two companies, Fraikin and Petit Forestier, enjoyed very rapid growth, we've now moved on to the materials handling sector.s the materials handling and forklift truck sector (***), where long-term leasing has made its mark, this market has seen spectacular growth in recent years. The long-term rental offer, with contracts ranging from * to * years, is developing particularly for large machines with capacities in excess of ** tonnes. Several companies are expanding rapidly in this market:

The Poisson group, market leader in large equipment for construction and public works companies, and especially for companies operating in the environmental market (***), manages a fleet of around *** machines.

BM Rent, a subsidiary of Bergerat Monnoyeur, the importer of the Caterpillar brand, rents out a fleet of over *,*** large Caterpillar machines.

ENCO rents out over *,*** different brands of construction and quarry equipment.

2.1 Determining demand: the building market

Building sector analysis:

The FFB (***) estimates the value of production in the building sector at ***.** billion euros in ****, up *.*% on **** .

Production value in the building sector by segment France, ****- *****, in billions of € **** Source: ****

The table below gives an account of growth - excluding the price effect - in the various segments of the building sector.

Source: ****

The graph below shows the breakdown of production in value terms according to the different segments of the building sector.

Estimated distribution of production by value in the building sector, by sector France, ****, in Source: ****

Housing starts :

within new housing, multi-family units are in the majority, but the number of housing starts is declining (***). Overall, the number of new housing starts is expected to decline by *% in ****, having already fallen by *.*% in ****.

Trend in new housing starts France, **** - *****, in thousands of starts Source: ****

the table below shows the strongest increases in new non-residential housing starts by sub-segment : industrial buildings show the strongest growth (***), while the overall segment is up by *.*% .

Trend in the number of new non-residential housing starts France, ****-****, as % of total Source: ****

2.2 Determining demand: the public works market

Public works sales reached €**.* billion in ****, up **% on **** , according to the Fédération Nationale des Travaux Publics. Maintenance work will account for just over **% of the total in ****, compared with **% for new construction. The chart below highlights market trends since ****, with strong growth since **** (***).

Public works sales France, **** - ****, in billions of current euros Source: ****

The chart below highlights the breakdown of **** sales by trade. Roadworks (***)

Breakdown of public works sales by business line France, ****, in % of sales Source: ****

Local authorities are the market's main players, accounting for **.*% of sales - Communes and EPCIs (***) are the main players for these authorities, accounting for */* of total public works sales in ****.

Breakdown of public works sales by contracting authority France, ****, in % of sales Source: ****

For ****, FNTP forecasts growth of *% in value and *% in volume compared with **** . The table below shows which players - or contracting authorities - are expected to see the strongest growth in ****.

The municipal electoral cycle has a major impact on public works: in the run-up to municipal elections, there is often a significant increase in investment by municipalities and inter-municipal bodies, in order to complete the programs announced during the term of office before the next election. However, ...

2.3 Determining demand: the extraction market

Those involved in extraction (***) need certain types of equipment, such as dump trucks and excavators.

In ****, mineral extraction amounted to *** million tonnes (***) - **% of which was sand and gravel.

Just over *,*** quarries remained active in ****, down **% since ****. [***]

The graph below shows that, after a drop in activity between **** and ****, growth has since picked up again.

Extractive industries sales on the French market France, ****-****, index base *** **** Source: ****

2.4 Why rent rather than buy construction equipment?

The main argument is cost control, but leasing is also more flexible and environmentally friendly, according to DLR. The table below compares some of the advantages and disadvantages of buying and renting construction equipment.

So, except when the equipment in question represents the manufacturer's core business, leasing seems to offer a number of advantages. Machine utilization is a good criterion for choosing between leasing and purchasing (***).

For Joël Fruchart, chairman of the DLR's "Rental" group, "rental has a long way to go, as the notion of use is becoming increasingly important, to the detriment of ownership". [***]

Rental terms: wide-ranging and often flexible possibilities[***]

The duration of construction equipment leases varies widely:

most rentals last from a few days to a few weeks rentals can last several months, or even several years (***) with some rental companies. In most cases, rental companies also offer the possibility of servicing the equipment during this period.

Contract extensions are possible and quite frequent.

2.5 Summary of key demand drivers

According to Batiweb, future growth for the construction equipment rental market is likely to be based on two segments, especially as they require lifting equipment and heavy machinery:

civil engineering / public works non-residential (***)

3.1 Segmentation and player dynamism

Simplified industry value chain :

Player analysis:

The table below analyzes the evolution of players in the Construction Equipment Rental market, according to DLR.

In ****, Loxam's market share was **% according to Les Echos, which underlines the fact that, despite the presence of a few major players with a nationwide presence, the rental sector remains relatively unconcentrated in France. Indeed, there is a large number of companies - particularly SMEs - with an average of ** people per company.

Competitive strategy: [***]

Leader Loxam's strategy is not limited to the French market: [***]

In ****, Loxam's worldwide sales growth was **% - driven by numerous acquisitions. In ****, sales growth was *% - with consolidated sales reaching €*.* billion - by integrating and rationalizing acquired businesses, particularly in the lifting segment. In ****, sales growth was again over **% - with the acquisition of European number * Ramirent for €*** million (***)

Loxam's French sales in **** were around €*** million, or **% of the group's total sales, as highlighted in the chart below. [***]

Geographical breakdown of Loxam sales France, ****, in Source: ****

With Kiloutou (***), Bouygues Construction Matériel, Mediaco, Accès Industrie, Salti Location and Uperio, as well as numerous other SMEs, competition in this sector is fierce.

Among the main drivers of the offer are :

Variety and availability In ...

3.2 Production analysis

There was a drop in investment - of almost **% - between **** and ****, after two years (***). This is also a sign of a slight slowdown in growth compared to **** and ****.

Investment trends in the construction equipment rental sector France, **** - ****, in billions of € and in % Source : DLR Evolution investment amounts **** vs **** : - **% Change in investment amounts **** vs ****: + **%

ROI (***) - pure rental sales / fleet value - has also deteriorated in ****, from **% in **** to **.*% in ****.

the value of construction equipment for hire, meanwhile, is on the rise, reaching €*.* billion in ****.

Value of construction equipment rentals France, ****-****, € billion Source : DLR Growth rate **** vs ****: + *.*%

The average age of the fleet stood at **.* months in ****, i.e. around just over * years: there has therefore been an overall rejuvenation of the fleet since ****.

Average age of the construction equipment rental fleet France, ****-****, in months Source: ****

3.3 Distribution analysis

How do you rent? [***]

Construction equipment rental groups use a large network of agencies to optimize rentals to construction industry players.

Agencies may be more or less specialized in a particular segment, as is the case with LOXAM:

Loxam Rental for construction equipment (***). Loxam Access for aerial work platforms Loxam Module for Modular Construction Loxam TP for heavy equipment, earthmoving, compaction and demolition Loxam Power for electrical equipment

While the counter is still used in **% of cases for rentals, and the telephone remains the most widely used means of communication and booking, the boom in online bookings is significant in the sector and growing. Direct web bookings are likely to supplant telephone use in the long term.

We're also seeing an increase in the number of equipment deliveries to worksites within a radius of less than ** minutes.

E-commerce, the future of distribution? [***]

Joël Fruchart, chairman of the DLR's "Rental" group, says that e-commerce is likely to become widespread in the long term. But this poses several problems:

it drives prices down it takes time to learn how to use the tools (***), compared with traditional telephone exchanges

Digital technology must provide "more services", according to the president of the DLR rental ...

4.1 Types of construction equipment for hire

We offer awide range of construction equipment for hire.

Tracktor's most popular equipment rentals include :

mini-excavators or backhoes aerial platforms (***) forklifts or telescopic handlers construction site barriers mini-cranes

The graph below shows the breakdown of Loxam's rental equipment fleet. [***] The breakdown may vary depending on the rental company and its specialization.

Distribution of Loxam's construction equipment rental fleet France, ****, in Source: ****

4.2 Price analysis

The graph below shows that between **** and ****, prices were roughly equivalent to those of **** - competition not allowing prices to rise. In ****, we see a drop in prices linked to the crisis, as there is more supply than demand.

Evolution of the price index for rental and leasing of machinery and equipment for construction and civil engineering (***) France, ****-****, index base *** **** Source: ****

In reality, prices are variable and depend on:

the type of equipment rented the length of the contract negotiation (***) Rental with operators is more expensive (***) Presence of optional equipment On-site collection or delivery of equipment to job site Average purchase cost of equipment - rising as equipment becomes more sophisticated Price may also depend on volumes purchased for major B*B players

In general, fixed rental costs - order processing, equipment preparation, equipment inspection - are incorporated into invoiced prices.

4.3 Supply trends: eco-responsibility and digitalization

Eco-responsibility: [***]

Rental of "clean" equipment is on the rise: electric, hybrid, gas or dual-energy equipment accounted for */* of investments in **** - particularly in small equipment and lifting. Such equipment also has the advantage of generally being quieter. However, two factors are holding back this eco-responsible trend:

the "green" offer is still limited, and fossil fuels are still the most widely used energy source the cost of "green" or "clean" equipment is higher (***)

At Kiloutou, **% of motorized equipment uses alternatives to internal combustion engines. [***] This share is likely to increase in the future, as more than half of Kiloutou's investments will be in electric and hybrid equipment.

Share of non-heat engine powered equipment France, ****, in Source: ****

Digitization of customer relations and invoicing:

According to Batiweb, in ****, Loxam modernized its website and invested in the dematerialization of invoices: **% of invoices were dematerialized in ****, * times more than in ****.

In ****, the DLR federation launched its project for a customer-rental administrative processing platform. This platform will have two interests:

economic: With ** million invoices a year and a saving of €* per invoice linked to dematerialization: we estimate savings of €*** million a year for the sector Qualitative: Improving interaction between rental companies and customers

Other impacts of digitalization ...

5.1 Regulations

The interprofessional general conditions for rental of business equipment without operator have been drawn up by a specialized commission bringing together users (***), in the document opposite: Conditions générales interprofessionnelles de location de matériel d'entreprise sans opérateur.

The main measures and obligations for rental companies include Periodic General Inspections, which must be up to date and present in rented equipment.

Another important regulation for the sector is the tax niche on non-road diesel, which is due to be abolished in July ****, which should boost electric and hybrid vehicles. [***]

6.1 Segmentation

• Kiloutou
• Salti location
• Bouygues Construction Matériel
• Uperio
• ENCO
• Bergerat Rent (Bergerat Monnoyeur)
• Poisson Groupe
• Sofilec Groupe
• Loxam
• Delta Service Location
• Transofico
• Médiaco Levage
• Accès Industrie
• Aprolis Groupe
• Layer France
• Mecalac
• Tracktor
• Hiboo
• LEM Equipement
• Huet Location
• APROLIS Location
• Best Location