A revival in home sales will boost moving activity, supporting demand for truck rentals
Los Angeles, CA (PRWEB) March 18, 2012
The Truck Rental industry has endured a difficult five years to 2012, with the recession putting a significant dent in demand. Low freight activity and a down housing market decreased demand for truck rentals and leases during the recession. According to IBISWorld industry analyst Antonio Danova, the silver lining for the industry was that the low freight activity and tight credit conditions caused fleet operators to significantly underinvest in heavy truck capacity. Instead, fleet operators were inclined to rent rather than buy until market conditions improved. In addition, 2010 emissions regulations for heavy trucks have further raised vehicle prices, increasing the relative affordability of truck leasing options. Despite these positive trends, revenue is still expected to decline slightly at an average annual rate of 0.8% to $16.4 billion over the five years to 2012, though recent advantageous positioning will result in revenue growth in 2012.
The Truck Rental industry has a medium level of market share concentration. The four largest firms are Ryder System Inc, Penske Corporation, Enterprise Rent-A-Car Company and AMERCO. Mergers and acquisitions were infrequent in this industry up to the recession. The last major consolidation before the recession occurred in 1998 when Budget Group, now Avis Budget Group, acquired the truck rental division of Ryder Systems. However, the recession prompted many players to increase acquisition activity to drive growth after 2009. Ryder's two recent acquisitions of regional truck rental companies have underscored this trend. Small private companies primarily engaged in truck and semitrailer rentals account for the remaining industry revenue. The industry leases trucks to consumers and businesses. Consumers use trucks for moving items from one place to another, while businesses use the industry's services to supplement their truck fleets or replace their fleets entirely. Many business customers lease trucks because it is often cheaper to outsource maintenance and fuel costs, and they can reduce their exposure to fuel price volatility and truck replacement costs through leasing contracts. Until the recession, the industry performed well as customers leased trucks to aid in the transportation of heavy goods. Customers leased trucks to expand their capacity amid high demand for construction and industrial products.
After two years of recession, rental truck companies like U-Haul geared to the residential moving market have been experiencing revived demand. While housing starts and existing home sales, which indicate pending moving activity, have broadly declined since 2007, this trend is expected to reverse as house prices stabilize and unemployment improves over the next five years, says Danova. Additionally, as freight demand picks up, more businesses will lease trucks to expand their fleets and hedge against fuel price increases anticipated over the next five years. Many businesses will continue to closely monitor costs, and in turn, lease trucks to protect their profit margins and integrate fleet management software to automate cost reporting. Given these positive trends, IBISWorld forecasts industry revenue will increase over the five years to 2017. For more information, visit IBISWorld’s Truck Rental in the US industry page.
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IBISWorld industry Report Key Topics
Companies in this industry primarily rent or lease trucks, utility trailers and semitrailers without drivers. Purchasing and lease-to-own arrangements of these vehicles are excluded from this industry. Firms that rent or lease industrial trucks and equipment, including forklifts, are covered in the Industrial Equipment Rental and Leasing industry (IBISWorld report 53249).
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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