The Equipment Leasing Industry Is Optimistic and The Construction Machinery Leasing Market Worth Looking Forward to

The Development of Domestic Equipment Leasing Industry Is Still in the Growth Stage

The equipment leasing industry in China started in the early 1980s. In line with the rise of technology import and export processing, financial leasing services were introduced to China and began to provide funds to import advanced equipment and technologies. China’s accession to the World Trade Organization in 2001 has brought new opportunities for the development of the leasing industry. For one thing, it benefited from the equipment leasing demand brought about by the rapid development of shipping and trade. For another thing, the entry of overseas leasing companies into China has brought new business types. The business development model and leasing business demand groups have optimized the structure of the domestic leasing industry.

Under the combined effect of policies, markets, and mechanisms, and other factors, the leasing industry has an overall effect of superimposing the number of companies and the growth of the industrial scale. The number of domestic financial leasing companies is increasing, from 1,026 in 2013 to 12,130 in 2019, including 70 financial leasing companies, 403 domestic leasing companies, and 11,657 foreign leasing companies.

As the state accelerates urbanization, the construction machinery industry has achieved great development in real estate and infrastructure construction, energy, and chemical construction, in which the domestic construction machinery leasing industry has also developed rapidly. China has become the world's largest construction machinery leasing market. Looking at the world, the construction machinery leasing market is more than 40 billion U.S. dollars, equivalent to about 25% of the total output value of construction machinery.

The Domestic Construction Machinery Leasing Industry Is in A Period of Development

The development of the domestic construction machinery leasing market is accompanied by the development of the entire construction machinery market. In the face of fierce competition in the construction machinery market, manufacturing companies have adopted the installation payments and the rental for sales to expand their market share. In recent years, the penetration rate of the domestic construction machinery leasing has continued to increase, which has maintained a rapid growth rate.

The Market Scale of Domestic Construction Machinery Leasing Industry Is Gradually Expanding

Encouraged by population growth, the progress of urbanization, and the encouragement of national policies, the scale of China's construction machinery leasing market has grown year by year. The market size has grown from 150 billion in 2010 to 700 billion in 2019, with a compound growth rate of 18.7%.

Outstanding Advantages of the Construction Machinery Leasing Industry

For construction enterprises, compared with self-purchased equipment, leasing construction machinery and equipment has obvious advantages in cost, service, and construction efficiency, and equipment utilization.

Decentralized Industry Competition

The market concentration of China's construction machinery leasing market is very low. The number one PY Rental has a revenue of 2.927 billion yuan in 2019, with a market share of less than 5%. According to industry research, the total market share of the top 100 construction machinery leasing companies in China is less than 10%, which is approximately equivalent to the level of the United States in the mid-1980s. The market share of the top three companies in the United States now accounts for approximately 23%. United Rental, a leading leasing company, has a market share of approximately 13%. It can be is seen that the competitive landscape of the domestic construction machinery leasing market is fragmented, and leading companies still have much room for improvement.

The Penetration Rate of the Construction Machinery Leasing Market Needs to Be Further Improved

At present, the number of equipment leasing companies has exceeded 11,500, with the small scale, in which there are only more than 100 construction machinery professional leasing companies with a capital of more than 50 million yuan. From a global perspective, the construction machinery rental market accounts for 25% of the total value of construction machinery. Only 10% of my domestic construction machinery products have entered the leasing market, while the figure in Europe is 85%. There is still a lot of room for the domestic construction machinery rental market to rise.

There Are Lots of Construction Machinery Leasing Dividends in China

In September and October 2013, General Secretary Xi Jinping successively put forward the strategic conception of building the "New Silk Road Economic Belt" and the "21st Century Maritime Silk Road", which provided a deep boost for domestic construction machinery and equipment. The new direction has prompted domestic construction machinery and equipment manufacturers to carry out a strategic layout for the international market. The Belt and Road runs through the continents of Asia, Europe, and Africa, which focuses on 65 countries and regions. Most of the countries along the route are financially tight with the not high per capita GDP, and infrastructure investment is relatively insufficient. According to estimates, the countries along the route have 10% or 20% of the room for urbanization improvement. Based on this analysis, it is obvious that the countries along the route have a large amount of infrastructure demand, and there may be a certain demand for low-cost equipment leasing, which is a good opportunity for the equipment leasing industry to participate in the local infrastructure construction market.

Nowadays, in response to the impact of the epidemic around the world, the increasing demand of physical enterprises to optimize the allocation of equipment resources, improve the efficiency of capital use, and reduce operating costs will accelerate the process of asset lightening, thereby further promoting the increase in leasing penetration. At the same time, the promotion of the development of the modern manufacturing service industry and the improvement of regulatory policies in China are constantly optimizing the business environment of the industry. The accelerated reform of the financial industry and the increase in the proportion of direct financing have broadened the financing channels for leasing companies.

In general, the development of construction machinery equipment leasing is of very significance for the enrichment of the construction machinery industry, the improvement of the risk-sharing mechanism, and the economical use of resources. Although the overall development of the construction machinery equipment rental market in China is not yet mature, it has the foundation and urgency for sustainable development due to its unique business characteristics and lubricant functions. Besides, the entire economic and industrial environment is inseparable from it.

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