Five phenomenal developments in the aerial work platform market

As a "new member" of the equipment rental industry, the aerial work platform, after just over a decade of rapid development, the market holdings have completed the 20-year journey in Europe in just 10 years. This has never happened to any other domestic engineering machinery products.

However, the seemingly "booming" aerial work platform market is actually hiding a worrying crisis. Whether it is the marketing methods of the main machine manufacturers, the operation and management models of the lessors, the rental service level and the safe use of aerial work platforms, there are many problems and worrying development trends in terms of the marketing methods of the main machine manufacturers, the operation and management models of the lessors, the rental service level and the safe use of aerial work platforms. The "crisis-ridden" aerial work platform market is not "alarmist"!

1. The sales of aerial work platform main machine manufacturers are "excavator-like"; Aerial work platform manufacturers are generally divided into three types: one is foreign first-line professional manufacturers such as foreign brands such as Genie, JLG, Olivier and Skydeck; the second is domestic first-line professional manufacturers such as Zhejiang Dingli and Hunan Xingbang; the third is the leading domestic engineering machinery manufacturers such as XCMG, Zoomlion, Lingong, Shanhe Intelligent, Liugong and Sany.

Some domestic brand OEMs have copied the marketing strategies and models of their excavators and other products, relying on a large marketing team to achieve high-density customer coverage, and adopting marketing models such as relationship marketing or one-to-one precision marketing to achieve the goal of ensuring or increasing their product market share.

However, the "excavator-style" marketing strategy and model may not be completely applicable to the high-rise machine market. According to the latest statistics, there are less than 3,000 domestic telescopic manlifts rental companies, while there are more than 400,000 excavator rental companies or self-employed businesses. The industry concentration of the high-rise machine rental market is much higher than the "fragmented" rental market of other products such as excavators. Some domestic high-rise machine brands have marketing teams of more than 100 people, and each marketing staff covers less than three customers on average, making the sales expenses account for a high proportion.

2. "Extensive" leasing operation management; Since 2016, the high-rise machine industry has entered a period of rapid development, with new machine sales exceeding 10,000 units, and a compound growth rate of more than 50% in a few years. The number of high-rise machine rental companies has grown from more than 300 to nearly 3,000, which has increased tenfold in just eight years.

Although the scale and number of high-end machine lessors are constantly expanding, the level of leasing operation and management of most small and medium-sized lessors is relatively low, and they still adopt an "extensive" management model, with many problems such as missing equipment ledgers or insufficient data, and lack of refined management process systems. In order to control operating costs, some small lessors do not even have maintenance service personnel or operation management teams, and only rely on the "free service" support of the main engine factory service personnel.

Even some medium and large lessors lack asset management capabilities and awareness, ignore the functions and significance of asset and financial management, and their operation management level is "blind men touching an elephant"!

To put it bluntly, the management awareness and ability of most high-end machine lessors still remain at the primary level of "renting out equipment and collecting money".

3. De-branding of leasing services: Compared with sales, leasing is a high-frequency transaction method. Therefore, customer loyalty and stickiness are very important for equipment lessors.

Improving the level of leasing services and establishing the brand effect and customer reputation of leasing companies are the guarantees of customer stickiness. On the other hand, the market competition of domestic high-rise machine leasing companies is still habitually competing with rental prices and leasing business terms. Except for the leading leasing companies, the leasing service capabilities and brand effects of most companies are "out of the question".

If the leasing company cannot provide a certain level of leasing services, there will be no direct results of corporate brand effects: first, low customer stickiness, high churn rate of old customers, high proportion of leasing business expenses, and poor corporate profitability; second, important customer resources are in the hands of business personnel with good performance and strong personal abilities. Once the business personnel jump to other leasing companies or start their own business, the customers will also be taken away and lost, causing serious losses to the company.

4. "Tower crane" safety management: In recent years, the leasing industry of construction machinery such as tower cranes and construction elevators has been trapped by the "abnormal requirements" of "one size fits all" of project general contractors. Customers will require that the equipment should not be more than five or three years old, or even new within one year. If the equipment exceeds the requirements of local customers or safety supervision stations, it will not be rented out and the residual value will plummet. The leasing company can only reluctantly give up. In essence, the abnormal requirement of "one-size-fits-all" completely shatters the connotation of the equipment full life cycle leasing theory.

From the current high-rise machine market, there are more and more signs that the safety management and customer demand of high-rise machines have a "one-size-fits-all" trend of "factory years".

The fundamental reason for the "one-size-fits-all" of construction machinery such as tower cranes and construction elevators lies in the extremely unbalanced supply and demand relationship between the huge equipment inventory and the shrinking market demand. If we look at it from this perspective, the high-rise machine leasing industry is likely to embark on the road of "tower craneization" in three to five years.

5. "Radicalization" of industry development: In the past decade, although the high-rise machine market has developed rapidly, the overall industrial chain is still in the development stage and has not yet entered a complete development cycle. Therefore, the mentality of "blind optimism", "impulsiveness" and "speculation" under the rapid development of the industry is inevitable, which also leads to the "radicalization" development trend of the entire industry. "Crisis is everywhere".

First, in order to achieve rapid listing, the leading lessors not only reduce the prices of the main manufacturers and strive for greater support from the centralized procurement end, but also engage in price wars from the market end to ensure a high rental rate of the fleet. As a result, the equipment leasing payback period continues to extend in the incremental market, and the survival space of small and medium-sized lessors is getting smaller and smaller, becoming victims of the vicious competition of the leading lessors. Perhaps, from the perspective of market competition, it is beneficial for the leading lessors to be cleared out of the market, but from the perspective of industry diversification, it is very harmful. It is a very simple logic. If small and medium-sized lessors find it difficult to survive, who will take over and digest the huge amount of second-hand equipment of the leading lessors in a few years? The high-altitude machine industry will also find it difficult to quickly develop into a mature industrial chain.

Secondly, the above points are also the external manifestations of the radical development of the high-altitude machine industry. The production capacity of major main diesel telescopic boom platforms manufacturers is constantly increasing, especially when the export of high-altitude machines is blocked, how to digest the huge production capacity is also the biggest challenge and risk of the high-altitude machine industry at present and in the future. The aggressive marketing methods of some high-end machine manufacturers, which are "excavator-like", pose huge debt risks. The aggressiveness in terms of down payment amount, financing period and sales credit review is far greater than that of other products such as "excavators".

From the perspective of industry concentration, the debt risk of the high-rise machinery industry is also much higher than that of other "fragmented" leasing products. In addition, the aggressive marketing methods of high-rise machinery manufacturers will also increase the blind optimism and expansion mentality of lessors or the "too big to fail" speculative mentality, forming a vicious circle, thereby exacerbating the industry's debt and creditor risk.

In summary, due to the lack of relevant statistical data (such as collection rate, overdue rate of main manufacturers, etc.), some phenomena may not be as serious as I wrote, but there are indeed some problems and risks in the current high-rise machinery industry that cannot be ignored.

In any case, due to the instrumentality, diversified application, weak cyclicality and easy scalability of high-rise machinery products, I still insist on being optimistic about the prospects of the telescopic arm lifts leasing industry. Although there are many problems in the current high-rise machinery industry and it has not yet completed a complete development cycle, this also means that the high-rise machinery leasing industry contains many market changes and development opportunities, which is unmatched by other engineering machinery products.

High-rise machinery leasing companies must maintain a rational mind and clear cognition, and through continuous improvement of the level of refined management and steady development according to market changes, the industry prospects are still bright!