Key Takeaways for Decision Makers
RENTER/SELLER: When pricing assets, relying on average list prices from resale websites can lead to skewed results. Many listings have already been listed for sale for an extended period of time and may not reflect current market conditions.
EQUIPMENT MANAGER: Due to depreciation and overhead costs, you’ll have better bargaining power when negotiating a price for equipment that takes longer to sell. On the other hand, dealers have less incentive to compromise on equipment that’s in high demand and sells quickly.
Heavy equipment sellers know finding the right buyer for a piece of machinery can take time. Although adjustments might be made to the price or description in order to attract more customers, the asset can remain on the market for weeks, months, or even longer.
How many assets remained on the market for at least one year? To answer that question, we began with two datasets. The first contained sales listings recorded from January to April of 2016, while the second contained listings from April 2017. By comparing the two groups of data, we identified thousands of pieces of equipment that were on the market in 2016 and were still listed for sale 12 to 15 months later.
Serial numbers played a critical role in the analysis. After all, there’s nothing surprising about seeing a dealer list multiple assets with the same make, model, and model year. But in each case, the serial number is unique, allowing us to determine whether we’re really looking at the same unit at two different periods of time. Advertisements that did not include serial numbers were excluded from the analysis. Furthermore, focus was narrowed to twelve of the most common equipment types in the construction space, leaving 130,000 unique pieces of equipment to classify.
Overall, about 18% of assets on the market last year were also seen in Q2 of 2017. The remaining 82% were no longer listed for sale. In many cases, this is because the individual pieces of equipment were sold through the private market or at auction. Other possibilities are that the dealer chose to rent the unit rather than sell it or simply removed the advertisement. In general, a low percentage of units listed in both years speaks to a dealer’s ability to sell that kind of equipment.
In the graph above, note that the percentage of slow-selling assets was much lower for small equipment like compact excavators, skid steers, and compact track loaders. On the other hand, rear dumps and graders were especially likely to remain on the market for a year or more. Given the wide variety of applications calling for compact equipment, it’s no surprise that these units are in high demand. Compared to larger wheel loaders and dozers, the low price points also present less of an obstacle for buyers.
Large generator sets appear to be an anomaly until specific models are examined. The average price across the entire equipment type is comparable to pricing for compact track loaders and backhoes, but the largest power units often sell for $500,000 or more. You won’t find these pieces of equipment in every contractor’s fleet, and with lower demand, it’s logical that these units take time to sell.
At the manufacturer level, the breakdown showed similar variability. Of the manufacturers selected, Bobcat had the lowest percentage of units on the market in both 2016 and 2017. Out of the thousands of items available on the used market in Q1 2016, only 11% can still be found on resale platforms nationwide. Volvo and Takeuchi units proved harder to sell, but this is likely due to the types of equipment in question. Much of the Volvo equipment fell into the rear dump or wheel loader categories, which would not be expected to sell as quickly as Bobcat’s compact equipment.
Only Multiquip and Wacker had a higher proportions of slow selling assets. About 32% of Multiquip units were no longer on the market in 2017, leaving 68% yet to be sold. However, all of the Multiquip models considered here fell into one equipment type (Large Generator Sets), making it difficult to compare them to the other manufacturers. Wacker Neuson is a similar case. In general, differences at the manufacturer level can be attributed to product mix rather than inherent characteristics of the manufacturer.
The most interesting comparisons are made at the intersection of equipment type and manufacturer. Bobcat, Case, Caterpillar, Deere, and Volvo produce equipment in all four of the categories shown above and can be compared directly. No single manufacturer consistently had the highest or lowest percentage. For example, although Bobcat equipment in general tended to exit the market within a year, Deere’s compact excavators were less likely to be recorded in both years than their Bobcat counterparts. Unsurprisingly, the patterns are the same between compact track loaders and skid steers, with Case leading the pack.
With so many other factors at play, it is important not to assume that brand itself is causing items to sell quickly or slowly. Instead, these figures highlight the importance of examining how long as asset has been listed for sale when buying, selling, or conducting other research.