The trend of renting instead of purchasing heavy machinery has proven to be beneficial for companies of all sizes across numerous industries, less administrative overhead along with reduced expense and maintenance anticipated to drive the Philippines heavy equipment rental industry during Covid-19.
To what extent is the Covid-19-induced recession impacting rental industry in the Philippines?
The coronavirus pandemic has led to an immediate drop in purchasing spending from the aviation industry, industrial, construction, transportation & government project spending. They have to deal with the budgetary needs while their business to a halt for lost demand (or purchasing power) by the onslaught of the pandemic. The rental rates of the Philippine rental equipment market have down slightly in 2020-2021. At the same time, however, the disruption of the pandemic is giving rise to new opportunities, and the rental market has the chance to establish a firstmover advantage as the customers rent the equipment instead of purchasing new one more than ever before.
The rental equipment market can be segmented on the basis of type (Party and Event equipment, General Tools & Construction and Industrial Equipment) and industry (Oil & Gas Industry, Construction Industry, Mining Industry & Power Industry). The construction and Industrial rental equipment market can be further segmented on the basis of type (Earthmoving Machinery, Material Handling Machinery, MEWP (Mobile Elevated Work Platform) and Concrete Road Construction).
Let’s take a look with us at Rental’s role through three of the most significant advantages:
Rental Advantage #1 – Cash Flow Management
One of rental’s biggest impacts is flexibility in managing cash flow. Payments on a purchased machine must be made whether the machine is being used or not. If available jobs shift and the machine is no longer needed, it can quickly become a troubling liability. When the backlog is uncertain, rental eliminates the capital investment required for a purchase and contractors can return unneeded machines if jobs change.
Rental Advantage #2 – Nimble Equipment Fleet
Speaking of jobs changing, that same flexibility allows for quick restructuring of an equipment fleet. Part of the creative adaptation to uncertainty means contractors may look to take on different types of jobs, ones they may not have historically pursued. Often, this may mean acquiring equipment not typically found in the fleet. By augmenting a fleet with rental machines, equipment can be swapped and added quickly while tying up less cash than in an entirely owned fleet.
Rental Advantage #3 – Renting to Own
Even amid uncertainty, thinking strategically means looking beyond just today. With many rental providers offering rent-to-purchase options, contractors can manage through short-term uncertainty while still adhering to a long-term plan. If the odds are likely that a rented machine will be purchased later, terms and pricing can be built into the rental agreement, allowing customers to invest in the eventual purchase while renting the machine.
Having been in the Philippines rental market for over 7 years and experience from the large mother company in Japan for more than 60 years, Mayon Machinery has made a commitment to deliver the highest quality of equipment and the best service to ensure your complete satisfaction.
Have you got a short-term/long-term equipment rental need now? Consult us today! We will be glad to serve you.
MAYON MACHINERY RENTRADE, INC – SALES & RENTAL
Head Office: 3rd Floor P & J Building, Lot 32, Blk. 69 M. Roxas Street, Corner Bayani Road AFPOVAI Phase 4, Fort Bonifacio, Taguig City
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