Learning from Market Trends, Caterpillar Ups Its Rental Game
Survival hinges upon an organism’s ability to adapt, the life scientists say. However that argument plays out under a microscope, it has definite proof in the competitive world of business. The heavy machinery titan, Caterpillar Inc., after looking long and hard at the measurements from every facet of its operations, moved from a strictly manufacturing and sales emphasis to one that furnishes the same quality construction equipment to the ever-growing rental market. In so doing, Caterpillar brings transformation in its dealer partnerships while welcoming a host of new customers into its orbit. None of this hurts the bottom line, either.
Where Caterpillar Has Been
The origins of Caterpillar extend to the late 19th century, when engineering innovators Benjamin Holt and C.L. Best designed groundbreaking (literally) agricultural equipment, e.g. combine harvesters. The two combined operations to form the Caterpillar Tractor Co. After acquiring the Russell Grader Manufacturing Company three years later, the company enlarged its focus to include construction as well as agricultural machinery. Among its new offerings was equipment used to construct Hoover Dam in 1936 and the Golden Gate Bridge in 1937. The company was also central in producing much of the hardware used by the American military in World War II.
Introducing unique track loaders, steam rollers, hydraulic excavators and specialty equipment throughout the 20th century, Caterpillar was honored to supply its engines to NASA in support of the Apollo 11 moon shot in 1969. All the while, the corporation extended its multinational reach around the globe. None of this happened without a relentless attention to the needs of its customers.
How the Customer Base is Changing
As the millennial generation has grown to adulthood and moved into positions of influence, its economic power is making itself strongly felt. The “sharing economy” is indicative of this evolution, as Forbes magazine pointed out in May of 2019: “Get professional cameras gear to shoot your next indie film from lensrental.com. Rent Apple computers for your newly hired team of designers to finish a month-long project — no need to buy.” It should surprise no one that construction company owners and other contractors might now think twice about major capital investments when the equipment they need is available without any binding financial strings attached.
How Caterpillar Is Responding
According to Caterpillar’s own metrics, the numbers are bearing this reality out. Caterpillar’s rental profits have jumped 20 percent since 2017. Furthermore, experts in the rental markets expect total rental income to soar over 10 percent in the next two years. Caterpillar saw this coming, instituting its own Global Rental and Used Equipment Services division while opening scores of new cat Rental Stores around the world. In addition, the company inaugurated an inspection and servicing program that certifies used equipment as restored to virtually new condition, compelling rental customers to consider making a purchase.
This greater attention to rental customers promises to keep Caterpillar in the game as a leading innovator for years to come, but they might not be the best rental investment choice just yet..