ILMA Compoundings June 2017 - 14

INDUSTRY RUNDOWN

Market Report
Booming North American Rental Market
Offers Opportunity
By Joe Zirnhelt
If you didn't hike through the nearly 3 million square feet
of exhibit space at CONEXPO-CON/AGG in Las Vegas in
March, you missed an opportunity to explore several new
markets for lubricants.

medium-term, even though electric-powered equipment is increasing. Electric-powered components will
continue to increase, but batteries still are a bottleneck
to a more widespread adoption rate.

And even if you were in Las Vegas, you might have missed
two of the most promising growth opportunities for lubricants. One is the booming North American commercial
equipment rental market. The second involves the changing
outlook for emissions regulations, which will affect the
demands for engine lubricants on commercial vehicles and
off-highway equipment.
CONEXPO-CON/AGG is a huge international event
held every three years for the construction industries, with
a focus on construction, aggregates and ready-mix concrete.
This year, nearly 128,000 attendees to the five-day show
visited more than 2,800 exhibits.

* Tier 4F compliance has gone up dramatically. In the
past, companies were using emission credits or pre-bought
engines to get around the Tier 4F ruling. However, the
credits and older engines are starting to run out, and
manufacturers are being forced to upgrade to true Tier
4F engines.

TWO MAJOR OPPORTUNITIES: RENTAL, EMISSIONS
One noteworthy event at CONEXPO this year was Diesel
Progress magazine's International Markets & Mobility
Forum, a Q&A panel discussion sponsored by ZF Friedrichshafen AG that addressed future off-highway regulatory
issues and changing technical and market trends.
The panel was moderated by Mike Brezonick, Diesel
Progress magazine's executive vice president and associate
publisher and editor-in-chief. Panelists included Dennis Huibregtse, CEO of Power Systems Research; Frank
Manfredi, president of Manfredi & Associates; and Charles
Yengst, president of Yengst & Associates Inc.
Key takeaways from the 45-minute program included:
* More than 50 percent of all the new construction equipment built today goes to the rental market. This is up from
35 percent from just five years ago. Rental has become a
major revenue stream for original equipment manufacturers (OEMs) and could reach 70 percent by 2020.
* Diesel remains the primary power source for equipment
in this segment and will continue to be the leader in the
14

JUNE 2017

| COMPOUNDINGS | ILMA.ORG

RENTAL EQUIPMENT CHANGES LANDSCAPE
Perhaps the least discussed of these points among lubricant
manufacturers related to the growth of rental equipment
companies. What does this mean if you're producing lubricants?
There are several questions to answer in the short-term and
the mid-term.
First, consider the way the growing equipment rental market
in North America is shifting equipment ownership and the
way this trend is changing equipment use and maintenance
requirements.
In his comments, Manfredi frequently referred to an article
he wrote for Diesel Progress last year in which he estimated
that the North American off-highway equipment industry
had reached the tipping point regarding new equipment
sales to rental companies versus sales to contractors and
other users.
Noting that more than 50 percent of new equipment sales
today goes to rental companies, up from 35 percent five
years ago, he forecast that equipment sales to rental fleets
would reach 60 percent to 70 percent of total new equipment sales in North America by 2020.
A piece of equipment that goes to a rental company rather
than to the end user/contractor normally gets used much
more extensively; it might be used 80 percent of the time,
for example, instead of 15 percent.

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ILMA Compoundings June 2017

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