Tier 4 fuelling increase in rental
By Helen Wright05 April 2016
Renting Tier 4-compliant equipment no longer comes at an increased cost to customers, according to the majority of companies surveyed by software developer EquipmentWatch and the Association of Equipment Management Professionals (AEMP).
The Tier 4 Benchmark Report analysed responses from more than 300 major equipment and rental companies in North America to measure the impact of the Tier 4 Final transition on the heavy equipment industry. The first wave of Tier 4 Final regulations was introduced in 2014.
It found that one in five (21%) of respondents said they would be renting more equipment in 2016 as a result of the impact of Tier 4 equipment’s increased original equipment costs.
The survey reported that the majority of rental companies (81% of respondents) offered Tier 4 equipment in their fleet, down 11% compared to the last survey, but 69% reported that it did not cost more for a customer to rent than the rest of the fleet.
Around 31% of rental company respondents said they did charge more for a customer to rent out Tier 4 equipment, and these companies reported a 21% increase in rental costs.
In addition, 74% of contractor respondents reported that their companies rented Tier 4 equipment, up 16% from last year’s survey. Contractor respondents experiencing increased Tier 4 rental costs reported an average 12% increase over Tier 3 equipment.
Survey respondents also said they expected their Tier 4 equipment to yield 1355 more hours on average than their Tier 3 equipment to 12392 hours.
However, due to the fact that most Tier 4 equipment hasn’t hit the end of its economic life, these expectations have yet to be seen, the report pointed out.
Meanwhile, 76% of respondents said their company tracked equipment ownership costs, with 63% of these saying they used accounting software to do this. And 96% of respondents said they expected maintenance costs for Tier 4 assets to either increase or remain on par with Tier 3.
Only 4% expected maintenance costs to decrease when compared to Tier 3 equipment, with 56% expecting an increase. Respondents reported spending a yearly average of US$4637 (€4113) on maintaining a piece of Tier 3 equipment, and an average of US$6493 (€5717) to maintain a piece of Tier 4 equipment.
In total, 44% of respondents said the total cost of ownership for Tier 4 equipment had been on par with their expectations, with 31% reporting that it was somewhat more expensive, and 16% saying it was much more expensive.
The report concluded that while adoption of Tier 4 equipment was growing, the rate at which equipment complying with these regulations was being added to fleets was slow at best.
It said overall preference for Tier 4 Final equipment was driven primarily by contractors and sellers, with departments of transport and rental houses leaning towards Tier 4 Interim and Tier 3 Flex equipment.
Following any planned Tier 4 equipment purchases, 38% of respondents overall still expected the Tier 4 saturation in their fleets to be less than 10%. While higher than the current rate of ownership, market saturation is likely to remain quite low through mid-2016, the report said.
The report is free to download: http://intel.equipmentwatch.com/2016-tier-4-benchmark-report/