US Product Rental and Leasing Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 51,175 product rental and leasing establishments in the US provide the use of commercial and consumer goods in return for lease or rental payments. Establishments may rent or lease nonfinancial intangible assets, including patents and trademarks (but excluding copyrighted works).
Seasonal, Uneven Demand and Cash Flow
Cash flow in the equipment rental/leasing sector is seasonal and driven by the dynamics of downstream industries.
Variability in Residual Value
Firms are exposed to financial risk when the market value of a vehicle or rental good is less than its depreciated value (residual value) when it is sold.
Industry size & Structure
The product rental and leasing services sector is comprised of 51,175 establishments that employ 585,900 workers and generate $210 billion in annual revenue, according to government sources.
- The product rental and leasing services sector represents 1.3% of the nation's Gross Domestic Product (GDP) and employs 0.4% of the country's workers.
- The sector is concentrated with the 20 largest firms representing 48% of revenue.
- In addition to employer establishments, the product rental and leasing services sector has 85,000 owner-operated establishments with no employees. Subsectors with the highest numbers of nonemployer establishments are commercial and industrial machinery and equipment rental and leasing (37%); automotive equipment rental and leasing (31%); and consumer goods rental (24%). The owners of nonemployer establishments typically perform the work and may outsource support functions like marketing and accounting.
- The product rental and leasing sector has shed about 4,100 establishments annually, which equals about 8.7% of existing establishments. However, the sector has added about 4,300 new establishments annually, which is equivalent to 8.4% of existing establishments. As a result, the sector has an average loss rate of 0.3%.
- The product rental and leasing sector is forecast to grow its employment base by 4.4% overall in 2023-2033, which is slightly higher than the national average of 4% for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Product Rental and Leasing Sector Industry Growth
Recent Developments
Dec 6, 2024 - Trump Plans to Revoke EV Tax Credit
- President-elect Donald Trump aims to dismantle a $7,500 consumer tax credit for EV purchases, according to Reuters. If the move is successful, it would also make leasing an EV more expensive, according to Bloomberg. The tax credits are offered through the Inflation Reduction Act (IRA), which requires qualified vehicles to be assembled in the US, and have a defined percentage of battery parts and other components originating in the US. However, fleet owners – including car makers’ finance arms – are exempt from the IRA rule. Automakers can claim the $7,500 credit then pass the savings on to lease customers. The tax credit has made EV leases competitive with gasoline-powered vehicles. In October, 79% of EV sales in dealerships were leases, according to Edmunds.com.
- The Equipment Leasing and Finance Association’s (ELFA) Monthly CapEx Finance Index (CFI) showed that new business volume increased 5.1% to $10.5 billion in October 2024 compared to the same month in 2023. ELFA CEO and President Leigh Lytle said, “The October CapEx Finance Index revealed an exceptional start to the fourth quarter for the equipment finance sector. While the Federal Reserve’s 50bps rate cut provided a boost, the real story lies in the sector’s fundamental strength. Borrowers and lenders alike demonstrated resilience, with healthy credit approvals and robust balance sheets. Looking ahead, this momentum positions the sector to confidently navigate the challenges of 2025, whether it’s a slower pace of rate cuts or ongoing inflationary pressures.”
- Most Americans, 58%, are optimistic about their household finances even amid inflationary pressures, according to TransUnion’s Q4 2024 Consumer Pulse Study. However, while inflation was a top three concern for 80% of consumers surveyed, worries about inflation are down. In Q4 2024, 58% of consumers said they were extremely or very concerned about the current rate of inflation, down from 64% in Q4 2023. Of survey respondents who said they were concerned about higher prices, 80% ranked groceries as their top category of concern; at 57%, gasoline was the second highest concern. Despite widespread worries about inflation, 57% of consumers said they planned to spend more on the holidays in 2024 than last year; 38% said they plan to spend less. Consumer sentiment is a key demand indicator for consumer product rental.
- Construction industry economists and other experts outlined the potential opportunities and challenges the sector faces in 2025 during a November webcast hosted by construction software firm ConstructConnect. Moderating inflation is a key tailwind for the construction sector, as prices for most inputs have fallen. Lead times for many products have also dropped, except for certain types of electrical equipment. Construction industry observers also anticipate the incoming Trump administration will curb regulations, which could speed up project starts. However, Donald Trump’s plan to implement tariffs could increase prices for construction inputs and possibly spark a trade war. The Trump administration is also expected to be less supportive of projects funded through Biden-era programs, including the Infrastructure Investment and Jobs Act, the Chips and Science Act, and the Inflation Reduction Act. The construction sector also lacks enough workers, a condition that could worsen amid a Trump crackdown on immigration. Construction activity drives demand for heavy equipment rental and leasing.
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