Striving for greater ‘rentability’ in France

While the construction industry is gearing up for one of its largest worldwide events this week - Intermat 2024 - the French rental market finds itself on solid ground but with an eye toward improvement.

“The past year has been okay, it has been a good year,” Rebollo said last week. “The problem is not the quantity of activity, it’s the quality.”

He explained that average rental rates have been declining in France for more than a decade, as much as 20% between 2010 and 2020. 

Likewise, price pressure is very strong in France, due to a number of large, worldwide building companies with the clout to negotiate prices to their advantage but to the detriment of the market. Rebollo said DLR has attempted to enlist help from the French government, but so far, the effort has not succeeded. The result is across-the-board average rates that are lower than what is profitable for many French rental companies. 

Hervé Rebollo, director general of DLR, the French rental and distributors association.

Despite this, Rebollo says his members are not worried, as they are focused on a number of prospects that promise to bring a steady stream of business, many of them infrastructure related.

“Our situation is between not so bad, and not so good,” Rebollo stated, noting that many small to medium-size French rental companies are currently caught up in the dilemma of renting vs selling used equipment. The difference comes with tax ramifications that are often misunderstood or ignored.

“We live a sort of paradox in France, every single thing will be rental in some years. It’s not me saying that, it’s society. We are becoming a rental/consumption society, and the paradox is that in the short-term future, we have to build a business model which is minded like a service model.”

He added, “We are very far from the UK and the US rental model. The notion of services - we have to develop this. I’m not talking about Loxam or any of our top companies. I have about 1,200 rental companies in France, mainly small and medium-sized companies, and they need to make very big progress on many different items.”

For example, Rebollo pointed to the fact that many French rental companies regularly rent equipment without a contract, something that would be unheard of in many other industries. Others resist the digitalization of various aspects of their business because they’re comfortable with their familiar customer base and see no reason to change tack.

“One of our main goals as a French professional organization is to help members become real professionals. There is big work to do.”

He added, “I say this with much respect, but you cannot continue like this, you must change. I’m not talking about the top 10 companies, but more in general: In France, we are late on a lot of things.

DLR is made up of approximately 1,200 rental companies in France, mainly small and medium-sized businesses.

“But there is something positive in that portrait, which is that rental companies are very reactive by nature, more than other sectors. I think this is one reason why they are still here, because they react; and they are able to do that very fast.”

Another large event coming to Paris this year is the summer Olympic Games, July 26 through Aug. 11, 2024. When asked if this will provide a boost to French rental companies, Rebollo said it’s uncertain.

“Nobody knows if we will have ‘rentability,’” he said, adding, “It’s so complicated to deliver [equipment]. Prices are under pressure. Clients pay with such delay. We do not find collaborators, especially for maintenance, around Paris. It’s very, very complicated.”

As for his outlook going forward, Rebollo said the rental business is definitely the future, but the challenge is in finding this “rentability” factor.

“For the time being, however, it’s okay,” he said.