Italian rental weathering pandemic well

Marco Prosperi, Director of Italian rental association Assodimi/Assonolo, is feeling positive about the Italian rental market, suggesting that the impact of the Covid-19 pandemic on rental revenues for 2020 could be relatively small. Assodimi’s study centre is forecasting growth of between -5 and +1%, compared to 2019.

This contrasts with the European Rental Association’s (ERA) recently published forecast for the Italian market, which predicted a drop of -16.3% in 2020. The figure has since been adjusted to -12.3%.

The Italian rental market is composed primarily of SMEs (small to medium-sized enterprises), which Prosperi says gives them the advantage of being highly responsive; “They also didn’t go into complete lockdown – 32% continued to work,” says Prosperi.

Small to medium-sized rental companies have seen activity levels recovering since the lockdown, according to Prosperi, and they are now expecting full-year revenue growth of between 0 and -5%.

Meanwhile, the larger rental players are predicting growth in the range of -8 to +5%, while continuing to make significant investments in their fleets and depots, says Prosperi.

Since the rental market in Italy is relatively immature, penetration rates remain low compared to countries such as France, Germany and the UK. This means that growth is always modest, says Prosperi, but so are contractions.

He adds, “These companies have good scope to look for new customers that are not yet using rental.”

Connected with this is the fact that Italian rental companies are increasingly diversifying their customer bases, according to Prosperi; “Rental companies’ customers are heterogenous, and so the expected 10% decline in Italy’s GDP doesn’t necessarily equate to a similar decline in rental revenues. The relationship is not linear.”

He adds, “In a situation of uncertainty like this, where the work exists but in a volatile way, the final customer is more inclined to targeted and small investments with certainty of costs. Professional rental provides an answer in this context.”

Since the country began to reopen in May, rental companies’ levels of activity have been accelerating, according to Prosperi, and the month of August, which is historically a slow month, was in fact busy this year.

In addition, Prosperi says the lockdown allowed rental companies to reduce their costs, meaning they could secure greater profit margins.

“Given how we were six months ago,” says Prosperi, “We can say that the current market is in good health with positive numbers and interesting short-term forecasts.”

Before the emergence of Covid-19, Assodimi had been predicting growth of between +10 and +15% for 2020.

Looking ahead to 2021, Prosperi is reluctant to make any predictions, saying the future remains very uncertain; “We do not know what strategies the Italian system will implement using European funds.”