Lack of Availability, Older Equipment, and Rising Values

As we close out 2021 and welcome 2022, our minds naturally turn to reflect on what we have just experienced. At EquipmentWatch, what we’ve been thinking about in particular is what the data from this past year can tell us about the used heavy equipment market and how it reflects the challenges of 2021. This month, we are focusing on exactly that: insights from 2021 to help us better understand the year gone by and provide some context for what we’ll see in 2022.

One of the biggest themes of this year for both construction and the economy more generally could be summed up with one word: shortages. In the realm of construction, this meant limited availability of labor, supplies, and equipment. We observed this when we surveyed equipment owners in 2021 and
53% reported experiencing a lack of availability of new equipment for purchase.

The lack of new equipment availability fed directly to the used equipment market and 40% reported a similar lack of availability for used equipment. These survey responses were collected in the summer of 2021; if we were to conduct the same survey now, we would almost certainly see increases to these
statistics, as the supply chain woes only seemed to get worse in the fall.

This decline in activity is something we have been reporting on all year and has had ripple effects on several other metrics. Looking at the top 10 construction equipment categories for 2020 and 2021 on the next two pages, we could certainly observe this playing out. For both the resale and auction channels, the top 10 list was made up of the same categories across both years, but the order of the rankings was directly impacted.

On the resale side, the top three categories of excavators, crawler tractors, and wheel loaders remained unchanged from 2020 to 2021. From there, categories rearranged themselves based on shocks to activity. All of the categories saw declines in activity, with the exceptions of off-highway trucks and graders.

The auction ranking experienced patterns similar to what we observed on the resale channel, with excavators and crawler tractors also topping the rankings in both years, but activity for all categories declining year-over-year.

It has also been interesting to see how the changes in activity have impacted which brands ranked highest across each year. Based on activity, Caterpillar and Deere topped the lists for both resale and auction in 2020 and 2021. From there, we can see a lot of movement on the resale rankings with some brands like Volvo and Kubota climbing in rankings and some like Bobcat and Case going in the opposite direction. Looking at auction, we see slightly less in terms of musical chairs, but still an impact on rankings based on activity alone.

All of this limited activity has translated into upward pressure on average age of equipment for sale for both the resale and auction channels. Among the top categories for resale and auction, all saw an increase in average age.

The lack of availability has also led to increases in values for most equipment categories. Eight of the top categories for auction and nine for resale saw year-over-year increases in values.

These increases are made even more dramatic when we consider them in the context of what we saw on the previous page: incredible increases in the age of equipment for sale. So, while some categories did not see an increase in values this is mostly driven by the fact that the mix of equipment has gotten older. This especially highlights some of the larger increases in value we have observed, because this increase in equipment age is also true for those categories.

This month we dove into values for the top equipment types for construction, lift, and agriculture and see these same trends playing out within each. As we look back and can see these impacts from the lack of new equipment feeding into the equipment ecosystem, we can also understand what it would take to see these trends in activity, age, and values reverse: increased supply of new equipment. Once we see that, we will see the pressure on these other metrics ease. It remains to be seen if that will be what 2022 has in store, but even modest improvements would likely have sizeable impacts.

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