Indian Rental Industry unanimously asks OEMs not to do rental business
Indian rental industry has objected to OEMs (Original Equipment Manufacturers) doing equipment rental business. World’s leading news magazine on rental industry, International Rental News has reported that India’s rental leader, Jitender Aggarwal, Chairman & Managing Director, Aggcon Equipments International Pvt. Ltd. has said, OEMs should not rent and has called for a discussion on the role of OEMs in rental.
Jitender Aggarwal said, “All the stakeholders of infrastructure sector need to work in synergy together. We all need to find a profitable balance where all stakeholders can support each other for mutual growth.”
“It is important that OEMs and equipment rental companies should complement each other and cater to the needs of construction sector together. Wherever, construction company/contractors want to purchase equipment, OEMs should sell but wherever construction company/contractors want to rent, OEMs should not to supply on rent, instead coordinate with infrastructure equipment rental companies to provide equipments to construction companies,” he added.
“Though rental industry has raised the concern of OEMs entering rental business in past also but the matter has not been discussed effectively yet. Therefore, this is an opportune time for rental industry leaders to deliberate on this and discuss it with OEMs,” he told.
Jitender Aggarwal has received wide support from rental business fraternity on this issue.
Reactions from Rental Industry
Rental companies have asked OEMs to focus on their manufacturing and sale of equipments only and called for boycotting OEMs who are in rental business.
Naveen Jain, MD, Ace Earthmovers, said, OEM should restrict themselves to their business and not interfere in rental business, if they do not agree we should boycott them.
Gaurav Gupta, Suntech Infra Solutions, said, we should not allow the OEM to ruin our business by being our competitor.
“Giving business to an OEM who is into rentals, is just like giving them more power and oxygen to eat our own business,” he added.
Former Secretary General of CERA India (Construction Equipment Rental Association), Satin Sachdeva asked OEMs to focus on equipment sales and after service only rather than entering rental vertical. He also asked OEMs to work in harmony with rental players by giving them 100% support.
Siddharth Armaan Sharma from Premier Infra Services said that OEMs which are entering rental business are majorly Indian and Chinese OEMs.
He also said, “Most of the Chinese OEMs are flooding the market with their equipments at sub-par rates and then also incentivising big contractors by making rental deals with them at rates unheard of in the market. This is a clear case of Industrial Espionage and will destroy the market.”
Rohit Sachdeva from Earth Equipments said, “OEMs are competing with our Rental Industry rather than complementing it as a strategic partner” and called to boycott those OEMs who are into the rental business.
Tejasvi W from Hindustan Nirman suggested to discuss it with OEMs and resolve this.
Reaction from other stakeholders
Amidst the reactions from rental industry, there was a cautionary warning for OEMs from other professionals.
Utkarsh Arora warned OEMs for entering in the business of their own customers.
He said, “If the same will happen, then there will be a very unhealthy atmosphere of business in the rental market and ultimately it will affect OEMs’ business at last.”
Abhishek Rastogi said, “The Indian rental market for construction equipment varies from region to region, and can also depend on the type of machine involved.”
He also said, “OEMs should restrict themselves from diversifying in the rental industry rather they should focus more on innovation, application, affordability, and collectivity contributing towards sustainable and green development.”
Are OEMs in India competing against their biggest customers – India’s rental industry?
The report of Off Highway Research that was published in International Rental News said, two thirds of construction equipment sales in India are to rental companies and rental penetration has seen considerable growth in India over the last decade. The proportion of machines sold to this channel has risen from 47% in 2010 to 67% in 2020 and 2021.
The report clearly indicates that Indian rental industry is the biggest customer of OEMs. Therefore, it is being widely perceived by Indian rental companies that OEMs in India are competing against their biggest customers by doing rental business.
A month ago, Jitender Aggarwal had asked ICEMA (Indian Construction Equipment Manufacturers Association) to publish sector wise and category wise sales in its quarterly report to know the number of equipments sold to rental companies and construction companies, respectively so that CE market can balance itself and help all the stakeholders to grow together and in coordinated manner.
