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How Important is a Brand Name for Hydraulic Excavators?

How important is a brand name in the hydraulic 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 of the past 13 months of average asking prices on the resale channel for hydraulic excavators within each brand. Average asking prices across all 14 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 350,000 hydraulic excavator observations. The brand premium is the variance percentage from the average asking price for all hydraulic excavator brands in our market data. We chose these 14 brands because they make up over 97% of the used market for hydraulic excavators. Brand premiums are important to understand because they provide insight as to which brands have the highest perceived value.

Among the seven brands of hydraulic excavators with the highest premiums, Caterpillar had the highest overall brand premium at the end of September, while Bobcat had the lowest brand premium of the seven brands in this graph

Among the seven brands of hydraulic excavators with lower premiums, Takeuchi had the highest overall brand premium at the end of September, while JCB had the lowest brand premium of the seven brands in this graph.

As can be seen in the first brand premium graph, Caterpillar had the highest brand premiums during the entire 13-month period, with Link-Belt, Deere, and Komatsu close behind. Hitachi, Case, and Bobcat round out the bottom three in order of the remaining highest to lowest. Only two of the seven brands had an overall increase in brand premium over the past 13 months, and they were slight increases. Deere increased from -2.71% to 1.62% and Massey Ferguson increased from -4.31% to -2.01%.

In reference to the second brand premium graph, Takeuchi had the highest brand premium but not until the most recent month of September, and was actually only the fourth highest in September of 2016. Kobelco and Volvo were very close behind with the second and third highest premiums. JCB and Doosan had the lowest brand premiums of any of the 14 brands, with JCB dropping from about -26% to -36% over the 13 month period.

In terms of popularity among the five brands, Caterpillar is clearly the most popular with 46.2% of the overall market share, while Deere is in second at 12.4% of the market. The rest of the brands, in order of market popularity, are Komatsu, Volvo, Case, Kobelco, Hitachi, Hyundai, Link-Belt, Doosan, Takeuchi, Sany, and Bobcat. In terms of average prices, Komatsu had the highest average asking price due with Caterpillar being the second highest; Bobcat had the lowest average asking price because the largest excavator they produce is only about 8.5 metric tons.

The brand with the highest overall average age in the graph below is Caterpillar and the brand with the lowest overall average age is Bobcat.

The brand with the highest overall average age in the graph below is Kobelco and the brand with the lowest overall average age is Sany.

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These pieces of equipment are offered in a very wide range of sizes, ranging from just 6.1 metric tons to over 400 metric ton machines such as the Komatsu PC8000-6, which weighs in at a whopping ~760 metric tons. These extremely large excavators are mostly used for mining, while the smallest hydraulic excavators are used for small construction jobs such as homeowner lawn excavation or digging trenches for laying cable. They are truly one of the most versatile pieces of equipment and can use a vast number of different attachments ranging from impact breakers to grapples to compactors.

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 three of the seven brands have average ages at similar levels, around ten years, as of September of 2017. Caterpillar has the highest average age as of September of 2017, with Komatsu and Hitachi being almost the same. Deere, Case, and Link-Belt have average ages between 7.5 and 9 years and Bobcat has the lowest average age throughout this 13-month period, ending at about 5.1 years in September of 2017.

Looking at the second age graph, you notice that Sany, the newest excavator brand among the 14 in this article, has by far the lowest average age, at almost three years as of September of 2017. Kobelco has the highest average age among these seven brands, at almost 8.9 years as of September of 2017. The other five, in order of highest to lowest average age, are JCB, Hyundai, Volvo, Takeuchi, and Doosan.