Emerging Trends in Heavy Equipment Buying and Selling in Q1 of 2023
In the first quarter of 2023, the heavy equipment industry has seen several trends emerge in the buying and selling of equipment. These trends are driven by a number of factors, including the overall state of the economy, advancements in technology, and shifts in demand. Overall, cautious optimism is the name of the game, with the Associated Builders and Contractors Construction Confidence Index increasing in January indicating expectations of growth over the next six months. In this blog post, we will explore some of the key trends that have emerged in the heavy equipment industry during the first quarter of 2023.
According to a recent report by the Association of Equipment Manufacturers (AEM), the construction equipment industry in the US is experiencing moderate growth. In 2022, the industry generated approximately $42 billion in sales, an increase of 4% compared to the previous year. This growth is driven by several factors, including increased demand for construction projects and the need to replace older equipment.
As noted in EquipmentWatch’s latest Market Report, large-scale manufacturing and infrastructure projects will be the key drivers for construction activity in 2023. Manufacturing-related construction spending jumped by 53.6% since January 2022, with the CHIPS Act being a major reason for the spike. Transportation spending increased by 9.2%.1 However, outside of those segments, persistently high costs (including equipment costs) contributed to a slowdown in nonresidential construction spending. The only slight hiccup in the overall market optimism comes from the residential construction market, with higher interest rates giving investors pause.
As the US economy continues to recover from the pandemic, many construction projects that were put on hold are now being started, driving demand for heavy equipment and machinery. Additionally, the federal government’s emphasis on infrastructure investment is expected to boost demand for construction equipment, both new and used, in the coming years.
Growing Demand for Used Heavy Equipment
One of the key trends that we have seen in the first quarter of 2023 is a growing demand for used heavy equipment. This trend is driven by many factors, including the high cost of new equipment, the increased availability of used equipment, and the overall economic climate.
As the cost of new heavy equipment continues to rise, many buyers are turning to the used equipment market as a more affordable option. Additionally, advancements in technology have made it easier for buyers to locate and purchase used equipment online, increasing the availability of used equipment in the market.
In response to this trend, many heavy equipment dealers and manufacturers have begun to offer used equipment as a way to meet the growing demand. For example, John Deere recently launched its Certified Pre-Owned program, which offers buyers the opportunity to purchase used equipment that has been inspected and certified by John Deere technicians.
Rising Material Costs
Another trend that we have seen in the first quarter of 2023 is rising material costs. This trend is driven by several factors, including supply chain disruptions, increased demand for materials, and transportation costs. To address this trend, many construction companies are exploring alternative materials and supply chain strategies that can help reduce costs and minimize delays. For example, some companies are turning to recycled materials or locally sourced materials as a way to reduce transportation costs and minimize the impact of supply chain disruptions.
Another factor contributing to the growth of the construction equipment industry is the need to replace older equipment. Due to supply chain issues, many construction companies have put off buying new equipment during the Pandemic years. This backlog in desire is starting to show as newer models become more available. As equipment ages, it becomes less reliable and less efficient, leading to increased maintenance costs and downtime. Many construction companies are therefore investing in new equipment as a way to reduce costs and improve productivity.
With buyer trends shifting, new product lines being introduced, and new technologies streamlining how we do business, it’s an exciting time to be in the construction business. As the industry continues to evolve, it is important for heavy equipment manufacturers and dealers to stay up-to-date with these trends in order to remain competitive. By understanding the needs and preferences of their customers, manufacturers and dealers can better position themselves to meet the demands of the market and drive growth in the industry. For over 60 years, EquipmentWatch has been the industry’s unbiased source for equipment ownership, operating costs, and disposition decisions.
At EquipmentWatch, we analyze equipment values on a regular basis with our monthly Market Reports. More in-depth reports such as The State of the Construction Equipment Economy aim to arm you with the insights you need to make quality, informed decisions about how to manage your heavy equipment. EquipmentWatch can help you with the data you need now to set accurate rates, value your fleet, make disposition decisions, and understand when to rent equipment. We are also ready to be your principal data provider for any AI-focused projects you take on in the future. For more information on the data solutions offered by EquipmentWatch call us at (888) 307-1713 or click here to request a product demo.