Key Takeaways for Decision Makers
RENTER/SELLER: If you are looking to secure the highest premium on the resale market, consider going with Caterpillar or Deere—these two brands will garner close to the same premium for wheel loaders.
FINANCE: The best brands to finance are the ones that have the longest useful life and garner the highest premiums, such as Caterpillar.
EQUIPMENT MANAGER: Owners of Doosan or Hyundai wheel loaders might be better off holding onto them and seeing if they can rebound, while someone looking to purchase a wheel loader should look into buying these brands due to their low premiums.
How important is a brand name in the compact excavator market? Thousands of dollars in advertising, marketing, and brand awareness are spent each year by major OEMs in this space, and they’re mostly geared towards the sale of new equipment. On the secondary market, the impact of the manufacturer on the fair market value can be harder to determine. At EquipmentWatch, we have developed a metric, known as the brand premium, to better understand this topic.
In this article, our brand premiums are based off the past 13 months of average asking prices on the resale channel for wheel loaders within each brand. Average asking prices across all ten brands are used as our baseline. The graphs within this article were created by isolating the impact of brand name by holding remaining factors such as region and age constant across more than 260,000 wheel loader observations. The brand premium is the variance percentage from the average asking price for all wheel loader brands in our market data. We chose these ten brands because they make up 95% of the used market for wheel loaders. Brand premiums are important to understand because they provide insight as to which brands have the highest perceived value.
As can be seen in the first brand premium graph, Caterpillar had the highest brand premium in January, with Deere in a very close second. We can see that Deere had the highest brand premium in September and October of 2016, but Caterpillar regained their top position in November of 2016. Only two brands had an overall increase in brand premium over the past 13 months, and they were both very slight increases. Case increased from -7.5% to -5.3% and Komatsu increased from -13.25% to -10.69% over the past 13 months.
Looking at the second brand premium graph, we see that none of these five brands have a premium higher than the average as of January, with New Holland having the highest of the brand premiums at -12.32%. The largest decrease was in Kawasaki, going from -7% to almost 17% below the average. The lowest brand premium of any brand, as of January, was found in Doosan, which was about 26.5% below the average. None of the brands in this graph had an overall increase in brand premiums over the past 13 months.
In terms of popularity among the twelve brands, Caterpillar is the most popular with almost 44% of the market share, while Deere and Volvo round out the top three. The rest of the ten brands, in order of popularity, are: Komatsu, Case, Kawasaki, Hyundai, JCB, Doosan, and New Holland. In terms of average prices, Caterpillar had by far the highest average asking price, with Deere and Volvo being the second and third highest.
Brand Premium is also closely related to another metric that EquipmentWatch uses, Residual Values, as we are releasing the winners of the second annual Highest Retained Value Awards on February 20th.We will also be having an awards ceremony at ConExpo in March for the winners. The residual values of popular series’ takes into account their brand premium. You can see all of the finalists for the three sizes of Wheel Loaders by clicking the link in the previous sentence. Seven of the ten brands listed in this article are finalists for these awards, with Doosan, JCB, and New Holland being the only three not represented in the award finalists. Last year’s winners for wheel loaders were Volvo for medium and large sized wheel loaders and Deere for small sized wheel loaders.
Average age is important to understand because it details which brands are staying on the market the longest. When looking at the first age graph, we can see that Caterpillar and Komatsu have the highest average ages of the five brands. Case has the lowest average age of any of the five brands, averaging about 8.45 years old as of January. All five brands have seen an increase in average age over the past two months and only one brand, Komatsu, has had a decrease in average age over the past 13 months.
In the second age graph, we see that Doosan has the lowest average age of any brand, averaging 6.25 years. New Holland has the highest average age of any brand, with an average age of 9.7 years. The largest increase in average age was in Doosan, going from 5.15 to 6.25 years. By using the content in this article, an equipment owner or buyer can determine which brands can bring the highest premium when selling or be acquired at the lowest premium.