January 2014

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Page 35 of 75

A Prevailing View 2014 Business Outlook Survey Make More, Don't Spend More Despite the convergence of unprecedented business challenges in 2014, most dealers see a foreshadowing of modest growth. BY KIM PHELAN Taking their cues from their customers, the AED dealers who responded to CED's annual Business Outlook Survey are overwhelmingly – more than three to one– anticipating total dealership revenues to be higher in 2014 versus 2013. What's puzzling, however, is why, in almost the same breath, 41 percent of these dealers are also indicating no change to their new equipment sales inventory investments for this predicted year of growth. However, a little more than a third say they will increase that investment by 1-10 percent year over year, and close to 17 percent said they plan to spend less on new machines for sale. In other words, a small majority of dealers expect to make more money yet plan to spend less on new iron inventory – so where do they expect to make that revenue, and where are they willing to spend? If you're thinking rental, bingo on both counts – just under half expect rental revenue to grow 1-10 percent, and another 22 percent think 2014 rental business will grow more than 10 percent. The responses for how dealers will invest in their rental fleets correlates closely – just under half say they'll increase the spend 1-10 percent, and 17 percent said they'll raise it more than 10 percent. How dealers come at the business of rental is not dramatically different from last year but generally reflects a gradual jump for factory-authorized distributors toward the rent-to-rent 34 | www.cedmag.com | Construction Equipment Distribution | January 2014 bandwagon. This year, close to 40 percent say that rent-to-rent (RTR) is their dominant methodology compared to 46 percent last year. A miniscule 12 percent do most rental as rental-conversions, and 26 percent of AED dealer respondents call it a 50-50 split between RTR and RPO. Breakin' It Down Even though a two-thirds majority of dealers still say their best customers are cautious about project backlogs and will therefore lean toward rental again, a lot more of this year's surveytakers say customers are optimistic versus this time last year: In 2013's outlook survey, only 11 percent of dealers were seeing customer (continued on page 38)

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