Is Russia the Next Great Rental Frontier?

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I participated in the first national rental conference in Russia earlier this month. About 50 Russian rental companies participated, and speakers, including myself, held forth on subjects such as the future of rental in Russia and the global rental market, new technological developments and best practices in rental company management. Other speakers addressed the role of sales, the development of safety standards and other issues.

B2B-Rent, the organization that set up the conference, is working to establish a Russian rental organization and several companies joined the nascent organization during the two-day conference. The Italian and European rental associations participated as well.

Rental is an immature industry in Russia, with penetration of only about 7 percent, according to Nikita Krotkiy, director general of B2B-Rent and owner of a Russian rental business. Krotkiy estimates the current Russian rental market at about $1.6 billion, and he expects that number to more than double by 2012, with rental penetration rising to about 13 percent by that time. Krotkiy says there are 50 or 60 pure rental companies in the country, with the rest of rental done by equipment dealers or contractors who rent out fleet that is not being utilized.

The Russian rental group has good reason to be optimistic. While Moscow is a very modern city, from what I could see, there is a great need for infrastructure development in the country. The southern city of Sochi will host the 2014 Winter Olympics and, according to all accounts, has a long way to go still in developing the stadiums and other facilities required for that massive event. And on the evening following the first day of the rental conference, FIFA awarded Russia the 1918 soccer World Cup, which will be held in a number of Russian cities. The need for stadium, hotels, improved highways, railways and other infrastructure, for this event will be extraordinary.

Is Russia the next great rental frontier? Well, that remains to be seen. There are a lot of factors both for and against, but anybody doing business in Russia or the other so-called BRIC countries – Brazil, India and China and some are now saying Indonesia should be included in that mix – knows the potential for growth and return on investment are great as are the risks. But I'm more inclined to say da than nyet.

I'm far from an expert on Russia. This was only my first visit there. I can say I was impressed by the country's potential and the vitality and passion of the rental people I met in my short time there. But I believe we'll be hearing much more about the Russian rental industry in the future.

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Michael Roth

Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a...

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Gary Stansberry is president of The Stansberry Firm LLC and specializes in business sales, fair market business valuations, operational consulting and positioning businesses to increase their value.
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