Is the supply chain crisis over for heavy equipment?

Is the supply chain crisis over for heavy equipment?

The quick and easy answer is “almost.” With a small caveat that 2024 looks more likely to be the end to the heavy equipment supply chain crisis. And truth be told, we’ve now been in year three of supply chain hiccups. As such, crisis is no longer a fitting term. “Backlog caused by supply chain issues” seems more on point.

The not so quick and easy answer is that OEMs have found new ways to adapt. The many issues they faced in the last three years have forced OEMs to realize that supply chain problems – to some degree – may always be present.

As a result, OEMs have forever changed how they source their materials – in some cases moving factories, in others, finding new ways to source essential parts. And, with Congress recently passing the CHIPS and Science Act, incentivizing semiconductor manufacturing closer to home, all of this bodes well for a healthier, steadier future. 

This should, in the years to come, prevent another perfect storm of issues – pandemic, labor, transportation, wars – from causing OEM’s so many supply chain headaches. 

But has that solved the immediate need for new inventory on dealer lots nationwide? 

If you ask OEMs, yes, the sun is once again shining. As OEMs get smarter about sourcing their materials, you can almost hear a collective sigh of relief as back orders are getting fulfilled.  “From a top-line perspective our factories had their best quarter of execution since the beginning of Covid,” said Brent Norwood, Director of Investor Relations for John Deere. “Supply chain improvements enabled our factories to hit their line rates and deliver machines at a faster pace.”

In fact, sales last year were robust, at least for U.S. manufacturers. In an article from EquipmentWorld, Jordanne Waldschmidt reports that, “growth was bolstered by U.S.-based manufacturers, which accounted for more than 26% of the total revenue…up from 21% in 2021.” On lot new inventory continues to increase, with a 46.4% increase in year over year inventory, according a recent industry article. 

But what does this rise in new inventory mean for used heavy equipment? 

The quick and easy answer is that now may be the time for sellers to consider acting on the significant year over year gains we’ve seen in heavy equipment values. Why now? 

In EquipmentWatch’s most recent Market Report, year over year prices remain strong however, our analysts are seeing slight dips in values across all segments of the market on both the resale and auction channels. 

Is this the start of a market correction or simply a seasonal slowdown? 

EquipmentWatch’s market analysts believe this may simply be a seasonal slowdown. “It’s too early to tell if the significant year over year gains we’ve seen have simply stalled, or if the slight dip in values we reported in this latest market report is the start of a larger story,” stated Grant Nolen, EquipmentWatch’s Director of Sales. 

Stay tuned to upcoming Market Reports to find out more about the values of your heavy equipment. 

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.