New Whitepaper Combines Market Sentiment with Market Data

 

As 2022 winds down, it is natural to review this past year and reflect on important lessons learned. To do this, EquipmentWatch annually surveys fleet managers from across the U.S. and publishes the results. This survey provides our analysts with an immediate, on-the-ground perspective on what equipment managers are facing – in their own words. Combining this with monthly market insights, we have produced the annual EquipmentWatch publication, The State of the Construction Equipment Economy.

From all this analysis, three things are evident: 1) fleet managers feel confident about the level of contracts they have in hand (which bodes well for a strong start to 2023); 2) fleet management requires more precise and strategic planning than ever before, and 3) fleet managers are relying on strategic relationships to help them source their equipment. As we head into the new year, how equipment is sourced, and what equipment a fleet manager can get their hands on, is top of mind for all contractors and fleet managers.

“Contractors remain decidedly upbeat, with backlog expanding and expectations for rising sales, employment, and profit margins over the next six months,” said Associated Builders and Contractors Chief Economist Anirban Basu. In fact, according to The State of the Construction Equipment Economy, nearly 40% of equipment owners anticipate having additional projects that will require adding equipment to their fleet.

After nearly 18 months of new equipment inventory shortages due to supply chain issues, heavy equipment managers are being extra careful in analyzing usage and extra creative in looking at how equipment – per job – is sourced. According to the survey results, 60% of equipment owners have experienced a lack of new equipment availability this year, up 7% from the previous year.

As supply chain inventory issues become par for the course, fleet managers overall have been hanging onto equipment longer and buying less equipment than planned. For many, 2022 proved to be a year to hold onto your equipment. As attractive as the opportunity was to cash in on selling used equipment, quite a few equipment owners (32%) haven’t sold anything over the past 12 months. That is a big jump from the 18% who did not sell equipment in 2021.

The overwhelming majority (86%) of equipment owners have purchased equipment over the past year, though most have gone about it rather conservatively. Some firms experiencing tighter cash flow remain leery about making big purchases. Other equipment owners simply point to the obvious: lackluster product availability.

This gradually mounting lack of equipment hasn’t forced most equipment owners (68%) to stray from the brands they’ve been loyal to. Perhaps that is because the supply chain issues were not isolated to merely a handful of manufacturers. When asked about the brand composition of their construction equipment fleets, survey respondents pointed to the following brands as the most common:

• CAT – 81%
• Deere – 54%
• Komatsu – 39%
• Bobcat – 32%
• Kubota – 26%
• Case – 22%
• Volvo – 20%
• Kobelco – 12%
• Hitachi – 11%

Looking ahead to 2023, nearly 40% of equipment managers plan to have more projects and will need more equipment to fulfill those contracts. Next year is set up to be a good one for rentals. Half of equipment owners expect rental frequency to remain the same. One-third anticipate renting more equipment. Equipment owners are also driven to rentals by their ROI goals. Roughly 32% do not want to commit funding to equipment purchases, and 22% said their financial analysis of renting vs. buying has nudged them a bit further in the direction of renting.

Relationships, both from the new equipment dealer perspective, as well as rental equipment dealer, take on a whole new meaning when tight supply chain issues are stretched this long. “There is so much more fleet planning now…We’re very involved in people’s businesses now. That has been a change and educational process,” one rental dealer said, adding that the dealer-contractor relationship is much more intimate now.

While acquiring new or used equipment relies heavily on the dealer relationship, many equipment owners are relishing the strong market for used equipment that has resulted because of the lack of inventory of new models. Two-thirds of those surveyed actually bypassed the dealer channel to take advantage of the strong secondary market for construction equipment. The hunt for quality used equipment, combined with tight inventory on the new equipment side, bodes well for the resale and auction market in 2023.

In looking at how equipment values trended in 2022, there have been some mixed signals that are, perhaps, reflective of the unpredictable economic times we live in. For a full analysis of values, including by equipment type, please see the full report.

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.