Although business conditions have improved year over year, rental rates deteriorated slightly in January compared to December, a UBS Investment Research poll of branch managers found.
According to the 110 branch managers who responded to the UBS survey, competitors have been reducing rental rates over the past few months. The managers were from United Rentals and H&E Equipment Services. The managers also found a continuing softening of the housing market.
Despite the rate pressure and housing market weakness, the managers responded that their current fleet sizes aren’t large enough to satisfy demand.
According to the survey, 44 percent indicated that business conditions were better than a year ago, with 30 percent stating conditions were worse. About 22 percent of respondents said rental rates had deteriorated from December to January, 13 percent said rates had improved, while about 64 percent said rates stayed the same.
Sixty-one percent of the respondents said competitors have been reducing rental rates over the past few months, versus 2 percent said they had been raising rates. The remaining 37 percent responded that competitors have held rates constant. When UBS last asked this question, 48 percent of branch managers said competitors were reducing rates, while 12 percent said competitors were raising them. About 40 percent said competitors were holding rates constant.
On the fleet question, 39 percent indicated their fleet size was smaller than needed to meet demand, while 6 percent said it was too larger, with about 55 percent indicating the fleet size was the right size. Twenty-six percent of respondents opined that the residential construction market is getting worse, versus 12 percent who said it was improving. About 62 percent said the residential market is stable.
