Daily Sharing -Price wars can be deadly for construction equipment rental companies In recent years, low-price competition has been common in industries with overcapacity and high homogeneity of products. However, the price war in the construction machinery industry has not brought more benefits to rental companies. Instead, it has disrupted the industry's ecosystem and caused immeasurable losses. Some believe that falling equipment prices and aggressive marketing strategies can shorten the payback period for rental companies, reduce initial investment, increase cash flow, and improve return on investment. This perspective is rooted in sales thinking and neglects the core of rental management, which is asset management. THREE DIMENSIONS OF ASSET MANAGEMENT: Asset Return:Low purchase prices do not equate to high returns. The key indicator is the net asset return (ROE), determined by equipment utilization, financial utilization, and operating profit. While low prices and ultra-low down payments lower entry barriers, they also increase market inventory, leading to lower utilization rates and rental prices. Low-priced equipment often means lower quality, shortening the rental lifecycle, increasing failure rates and operating costs, and reducing operating profits. Asset Risk:Aggressive marketing strategies increase the operational risks for rental companies, mainly through high asset-liability ratios and blind expansion.When market demand shrinks, rental companies burdened with massive debts may find themselves in financial trouble. Asset Preservation:Low-cost, homogenous products fail to enhance productivity and meet diverse operational needs, reducing the rental market value. Unstable new machine prices lead to fluctuations in the used equipment market, further damaging the asset value of rental companies. In summary, low-price competition and aggressive marketing strategies bring more harm than benefit to construction equipment rental companies, significantly affecting their asset management and operational stability. I hope my sharing can help leasing friends, if you are interested in communicating with me anytime welcome, the following ways can contact me, please follow my Linked in, I will share articles and ideas on it! Wechat: +8613141689721 WhatsApp: +60165148085 Email: mr1428636967@gmail.com Linked in: https://lnkd.in/gX53j8-f #AerialWorkPlatform #AWP #BoomLift #ScissorLift #ArticulatingBoomLift #TelescopicBoomLift #MastLift #RoughTerrainAWP #ElectricAWP #DieselAWP #MobileElevatingWorkPlatform #MEWP #ConstructionEquipment #IndustrialEquipment
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