RentalTracker study: sector stabilizing, but eyes set on 2025

If the responses to the ERA/IRN RentalTracker survey for Q1 2024 revealed some concerns about the present, the survey conducted in Q2 will do little to alleviate those concerns.

The overall assessment of the industry remains generally stable, although caution remains on capital investment and there is little hope for a better year in 2025.

In this regard, the ERA/IRN RentalTracker Q2 2024 survey, conducted between mid-June and early July, reveals a continuous change in sentiment among companies that are as focused on the present as they are looking to the future.

The analysis of responses to questions about forecasts for the coming year shows that the balance of positive opinions is +39 (the difference between the proportions of positive and negative opinions), with only 14% of responses predicting worse conditions next year and 53% predicting improvement.

This is a similar result to that at the end of the first quarter of this year and certainly better (for the most part) than in 2022 and 2023.

Companies from the Benelux region score best in this indicator: 71% of respondents expect their situation to improve within 12 months.

Nordic countries (64%) and international corporations (58%) also do well, although sentiment among the latter has deteriorated in recent months.

At the other end of the spectrum, companies in France (21%) and Spain (18%) continue to see a decline, although in Spain sentiment has been holding up for some time, so expectations are expected to fall for 2025.

Focusing on the here and now, and more specifically on current conditions, there is a very slight drop in the balance of first-quarter views of companies reporting improved business conditions, although opinion has become more polarized, with 40% reporting improved conditions, while 29% see a worsening environment. The percentage seeing “no change” was 31%, up from 42% at the end of the first quarter of this year.

It is worth emphasizing that the number of positive responses was the highest in two years.

The survey does contain some positives for current market conditions. Spain has the most “improving” responses at 67%, while the data for Nordics (55%), International (47%), Benelux (43%) and France (32%) show improvements compared to the first quarter.

The least positive about the current business conditions are companies in Italy (30%) and the UK and Ireland (20%)

Germany, on the other hand, is the country that saw the biggest drop in positive sentiment compared to the first quarter – from 36% to just 24%.

Year-on-year growth

The Benelux was among the top countries in terms of positive economic growth in the second quarter, which confirms the current sentiment.

Compared to the same period last year, 50% of responses from businesses in the region reported improved conditions, although it should be noted that in our last survey this figure was 76%.

There is also room for positivity among companies in France and international companies. However, the picture is less positive for companies in the Nordic countries, Germany, Italy and the UK and Ireland.

Our data for Germany shows that only 13% of companies in the country reported higher activity in the second quarter of this year compared to the same period last year.

Looking at expectations for 2024 as a whole compared to 2023, while there is a positive balance of opinion at 20%, this is a 32% drop at the end of the first quarter – sentiment for the current year has clearly deteriorated.

You have to go back to Q2 2023 to see how low it is. In fact, since Q1 2021 – when the post-Covid recovery was in full swing – the rate has largely remained above 50%.

Elsewhere, the balance of opinion on fleet investment this year remains negative (-2%) – in other words, those expecting to spend more are offset by those spending less. Still, only 30% will spend less in 2024, while 70% will maintain or increase their spending from 2023 levels, which is not bad.

In terms of expectations for fleet spending next year, while sentiment has deteriorated somewhat compared to the first quarter, there is still a healthy balance of opinion of +24%.

Some 84% of respondents will maintain or increase spending next year, while only 16% expect investment to decline.

The survey also reveals a very slight deterioration in usage levels in Q1, with respondents seeing usage levels rise by 10%, down from +16% in Q1, but still an improvement on the 4% seen at the end of 2023.

In terms of take-up rates, Italy is the leader with 60% of respondents reporting an improvement, although this should be considered anecdotal given the relatively modest number of responses we received from Italy.

In the second quarter, companies reported that the overall changes in reported capacity utilization rates would not be large, although it is worth noting that companies in Germany, as well as international corporations, were less optimistic about capacity utilization trends than in the first quarter.

Employment Plans

What about hiring intentions? It is well documented that companies in Europe are struggling to fill skilled positions and retain employees, and the Q3 2024 hiring intentions survey seems to confirm this.

The balance of opinion in this case – the difference between the proportions of people who will increase or decrease recruitment – ​​is +26%, down slightly from 29% in Q1.

Given the relatively modest conditions for doing business, there are still many companies looking for employees.

Companies in Spain, the Benelux countries and multinationals are the most likely to recruit more staff; those in France, the Nordic countries, Italy, Germany and the UK are the least likely to do so (but in all of these countries the views are predominantly positive).

So, in the context of previous survey results, the message from the responses seems to be to “wait” and can be seen as a continuation of our previous survey, which contained some mixed messages (no great expectations for 2024, but cautious optimism for 2025).

It will be interesting to see whether this positive outlook will continue into the last quarter of 2024 and early 2025.

Comments:

1. The full report, with more data, will be published in the July-August issue of International Rental News.
2. The survey was conducted in the second half of June 2024 and the first week of July 2024, and 123 companies from Europe participated. IRN would like to thank ERA and the national rental associations in Europe for their assistance in distributing the survey.