Q1 RentalTracker results: still positive in Europe

There are numerous ways to interpret the mixed but broadly positive findings of the Q1 2022 RentalTracker survey and all could, simultaneously, be legitimate: a response to the war in Ukraine; a reflection of the continued recovery from Covid (and the fact that the major post-Covid gains have already taken place); and a reflection on issues such as cost inflation and supply chain problems.

This is a way of saying that although by most measures the results remain positive, it provides evidence that the continuing positive impacts of Covid recovery are being offset by the war and its wider consequences.

Business conditions at the end of March 2022.

Yet ‘positive’ has to be the overall conclusion of the survey. There remains a +29% balance of opinion on current business conditions. That is, at the end of March, 44% of respondents said conditions were improving while only 16% reported a worsening business environment.

Of course, that also means that a sizeable proportion – 40% - were seeing no change in conditions. In other words, 84% are seeing either the status quo or improvements.

That may represent a decline compared to the two previous surveys for Q2 and Q4 2021, but these were exceptional periods marked by pronounced recovery from the pandemic. Viewed through the lens of 10 years of survey results, a +28% balance is a good place to be.

Future prospects
And we see a similar trend in the question ‘how will things be in 12 months’ time?’. The positive balance of opinion here is +52%, which, again, is lower than the 2021 surveys but still at a historically high level. Only 12% of respondents are expecting business conditions to be worse in early 2023.

Forecast for Q1 2023.

On the ground, the relatively buoyant conditions – in the context of Covid recovery – are reflected in a good response to the question of fleet utilisation levels.

The positive balance of +44% is lower than the 2021 surveys – as you might expect – but remains very high. Significantly more businesses are reporting improving utilisation levels than are seeing declines.

If you discount the 2021 results, the +44% positive balance has only been bettered in four surveys over the past 10 years. In essence, sentiment on fleet utilisation seems to be at similar level to that in the 2016-2019 period.

Fleet investment
There is a similar feel when it comes to investment. When we asked companies at the end of 2021 whether they would be spending more in 2022 than in 2021, 63% said yes and the positive balance of opinion was a remarkable +57%.

Asked the same question now, and there is almost no difference: 60% still expect to invest more this year than last and the positive balance of opinion (the difference in the percentages expecting to spend more and less) had dropped to 47%, still a high figure.

Will you invest more in 2022 than 2021?

It seems that pent-up demand post-pandemic and the continued recovery means that rental companies are still looking to increase their investment in fleet. Whether they can get what they want from the OEM suppliers is a different question…

And what about their thinking for fleet investment in 2023. It is early to be making such predictions, but the findings are remarkably positive, with 53% expecting to spend more in 2023 than this year – often on the back of higher spending this year - and the positive balance remains very high at +38%. Just 15% of respondents are expecting to cut spending next year.

Recruitment?
If there is uncertainty about the market, it is not unduly reflected in the results on recruitment intentions, with almost 62% of respondents expecting to add staff in the second quarter of this year. That compares favourably with the 57% who were expecting to recruit more when we last asked in December 2021.

In fact, not one respondent to the survey said they were expecting to reduce their workforces in the immediate future, which is the very first time that has happened. It probably also reflects the widespread shortage of workers being experienced by many business in the post-pandemic landscape.

Is fleet utilisation improving or deteriorating?

Regional trends
There were fewer responses to this survey than in 2021, which reflects the understandable focus on trends as the market came out of the pandemic. We had just over 70 responses from around Europe.

That means regional analysis is more difficult to report. What we can say is that Spanish and Italian companies – albeit with a small sample size – remain in positive, recovery mode, while in France, where presidential elections are looming, the results this quarter are pretty similar to the end of 2021.

Will you employ more people in Q2 2022?

So there we have it, a survey that is perhaps uniquely difficult to analyse. We can take the broadly positive message that the survey provides, while keeping in mind the multiple challenges faced by rental companies in Europe.