High machine rental cooperative model, how does SystemLift grow in a decentralized rental market

One of the main objectives of System Lift is to help independent leasing companies to professionalize, not only in Germany, but also in Austria and Switzerland, where they operate. The organization's 75 partners spread across 135 warehouses, mainly in Germany, benefit from centralized sourcing capabilities, cross-leasing within the System Lift community, and strong branding and marketing support. At the same time, they can also use the in-house System-card training System. In 2023, System Lift's lease sales increased by 9% year-on-year, ending the financial year with a record lease income of €300.7 million. This means that one in every five orders from its partners is completed within the System Lift community. One fundamental reason System Lift has been so successful in Germany is the country's unique rental market, which is not dominated by large national companies. Instead, there is a history of small local family businesses that have built long and deep relationships with their customers. The cooperative chooses its partners carefully, usually allowing only one rental company to join per designated area.

Christopher Friedrich, member of the executive Board of System Lift, said that last year, System Lift's leasing companies purchased equipment worth more than 100 million euros. "To get the best purchase conditions, you have to buy in sufficient quantities, which is why System Lift partners can only buy equipment from the manufacturers we have fixed contracts with, and everyone benefits." According to Friedrich, System Lift is one of Genie's top three customers in Europe, with annual purchases approaching 30 million euros. It is also one of Merlo's largest customers with a purchase volume of 20 million euros and is the largest customer of Ruthmann. In addition, it has signed contracts with traditional European equipment manufacturers such as JLG, Multitel and Niftylift. In addition, System Lift is starting to look at Chinese manufacturers. Last year, System Lift signed a framework agreement with Simbon Heavy Industries and established a partnership with Magni, initially for its telescopic arm forklifts, but now also for aerial work platforms manufactured by Dingli and sold through the Italian company. In 2023, System Lift purchased more than 10 million euros worth of equipment from Magni, most of which were aerial work platforms. "Magni is doing very well in Germany, not only selling equipment, but also providing very good after-sales service," Friedrich said.

Another advantage of virtual reality training System Lift is that it is a joint-stock company that is not listed on the German stock exchange, which means that its sole shareholder is its partner. "Our sole shareholder is the partner of System Lift and we have paid out more than €10 million in dividends over the last 20 years. If System Lift AG is successful, then the members will also benefit." In addition to procurement and potential dividends, System Lift partners can also enjoy other services, such as the System Lift training system. Last year, System Lift's training participation increased by 13%, setting a new record. In 2023, the number of participants in the organization's training exceeded 35,000. "In recent years, we have expanded our portfolio of face-to-face training and developed high-quality, flexible e-learning, which has received very good feedback." System Lift's training programs cover all types of aerial work platforms, industrial trucks and telescopic fork loaders, cranes, earthmoving equipment, sling workers and personal protective equipment users. It is important to note that the members of System Lift are primarily aerial work platform and telescopic arm forklift operators, and there are no plans to expand to general-purpose rental equipment. In Germany, System-Card is the market leader in operator licenses. "It's an international certification and it's widely recognized." "We have more than 130 System-Card trainers, and the difference with us is that only our partners can own the training centers." "We train the trainers, and then they can use the equipment to train their customers," Friedrich said. A significant development is the expansion of the program to enable participants to have hands-on experiences using virtual reality (VR). This means that System-Card training can take place anywhere and can be streamed live, allowing other trainees to see what a person wearing a VR headset is experiencing. System Lift uses the same Meta Quest 3 headset as the Genie virtual reality training program, although the software was developed independently. "We started the VR project about 3.5 years ago. There are different options out there, but we want to develop a VR training system without too many operational barriers, making it as simple as possible and easy to use anywhere." "We also wanted it to be easy to use with laptops and goggles, and relatively inexpensive for our training centers with low investment costs." We can take it anywhere." In the first nine months since its launch in March 2023, more than 180 training courses for aerial work platforms have used the System-Card VR application. "We've seen a huge increase in the number of students using VR."

The growth of System Lift is limited because typically only one partner is allowed per region. If necessary, the existing partner can cede part of the area to the new partner by mutual agreement. "In the last six months, we've added five new partners -- not just small leasing companies, but larger companies with around 1,500 aerial work platforms." "Of course," Friedrich adds, "expanding to other European countries is attractive, but for us the most important thing is to be able to communicate with each other, so language and cultural consistency is also important, so we will continue to focus on the German, Austrian and Swiss regions." "We have strategic partnerships with Poland, the Netherlands and Italy, but we believe that only by speaking the same language can we succeed and work closely together." During a visit to China, Friedrich said he had received an offer from a Chinese leasing company to set up a similar operation with System Lift, but Friedrich and his colleagues declined the offer. "To do this kind of thing, you have to go all out, and we believe our model has more business opportunities in German-speaking areas."

Regarding the market, the outlook for the rental market in Germany is positive. "2024 is going well for most System Lift partners - we don't see signs of a decline in data, but we do see difficulties in some sectors, particularly construction." "However, industries like the Energy transition have huge potential. In Germany, it is generally tougher than in previous years, but we expect things to change in 2025." Mature leasing markets in North America and Europe have been consolidating in recent years, and although there have been some acquisitions in Germany, such as Kiloutou's expansion in the country, Friedrich predicts that the traditional leasing model in Germany will remain strong. "Consolidation is happening, but what's really happening is the professionalisation of the rental industry." In Friedrich's view, it is difficult for international companies to enter Germany because the rental market is saturated. "There is no region in Germany where there is not a leasing company operating." "They're going to have to compete with these small local rental companies that have been operating locally for years and have good local networks." So rather than consolidation making the market more mature, organizations like System Lift are providing these local companies with the support they need to compete for modern services. "The market has become more specialized, in part because we've helped our partners become more specialized. We offer them a 360-degree portfolio of services to maximize their success. This allows them to focus on what they do best - leasing equipment and providing operator training - and let us handle the rest. For example, they don't need to hire a dedicated marketer -- that's our service."