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PIN Use on the Rise

In 1981, the Vehicle Identification Number (VIN) was standardized by the National Highway Traffic Safety Administration (NHTSA) in the United States which required all on-road vehicles to contain a 17-character identification number. This adoption occurred 27 years after VINs were first used in the United States. Previously, there had been no standard in vehicle identification number resulting in each manufacturer using their own formats. After the 17-character VIN became mandatory and standardized, it put an end to the chaos for both the auto industry and vehicle owners and made it much easier to access vehicle information such as make, model, year, engine, horsepower, trim, and type as well as history of a vehicle.

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In 2004, the 17-character Product Identification Number (PIN) for earth moving equipment was introduced by ISO. It is similar to the VIN standard from the auto industry and has the same format. The first three characters denote the World Manufacturer Code (WMC), an alphanumeric code designating the manufacturer of the machine. The next five characters represent the Machine Descriptor Section (MDS), comprising information describing the machine, followed by one character check letter (CL), an alpha character based on a calculation of the remaining 16 characters in the PIN. The last eight characters are for the Machine Indicator Section (MIS), a distinguisher of one machine from another by designation. The PIN standard has been slowly adopted by OEMs in the construction equipment industry and has also been adopted by second hand sellers and equipment end users.

For this analysis, we evaluated over a million sales transactions for five leading OEMs in the construction industry who have adopted and used the PIN standard in addition to a serial number system: Caterpillar, Case, Deere, Komatsu, and Volvo. We were observing specifically how seller and equipment owner behaviors have changed over the past 5 years regarding equipment identification numbers. Did they use the manufacturer serial number or the PIN as identifier?

Looking at the graph above, in 2013, only 11.5% of all observed identification numbers were a PIN; however, the use of the PIN has been consistently increasing, representing 41.89% of the provided equipment identifier in 2017 among listings for the five manufacturers included in this analysis. The percentage has more than tripled since 2013 and that is projected to grow, as more OEMs have been and will be adopting the PIN standard. Additionally, it is becoming more accepted as most the accurate, perhaps even preferred, equipment identifier by buyers, sellers, end users and owners. If we look at the trend at an individual manufacturer level, more interesting trends are revealed.

Looking at the graph above, we see that while the manufacturers have different percentages for observed PIN use, all five lines indicate an increasing trend. Deere has the most notable increase in PIN adoption making up slightly more than half of all PINs in the used market. Volvo also had a shows a huge increase with just over 40% of the PINs in the used market for heavy equipment. For the other three OEMs (Case, Caterpillar, Komatsu), the percentage of PIN use is around 10%, but they also showed a triple digit increase over the past 5 years.

Equipment professionals, especially owners and sellers, have recognized the PIN implementation by OEMs but understand that OEMs will not quickly and entirely replace their proprietary serial numbers with a PIN. Major barriers for OEMs are cost, time, complexity and potential confusion for their customers. Consequently, some manufacturers have decided to adopt the PIN standard in addition to a serial number system and often include the serial number in the PIN. However, because a year designation code is optional in the PIN standard, unlike a VIN, most manufacturers have elected to omit it, making it difficult or impossible to verify model year by PIN alone. This has led most equipment professionals to continue using the serial number for model year verification to get accurate equipment value estimation and parts ordering rather than relying on the PIN.

The ISO PIN standard has been around for a while but still appears to be in the early stages of adoption by heavy equipment OEMs. While many OEMs have already started including the PIN standard fully or partially on their production lines, few have transitioned away from the proprietary serial number system all together. From an owner, buyer or seller perspective, the primary use for the serial number or PIN is to identify the make, model, model variation, and most importantly model year. Yet the current jumble of systems is not fully serving its critical purpose because it is often very complicated and unreliable. Some OEMs have even used a different, but similar approach to the PIN standard by assigning the year code as a certain character in the serial number. This has successfully reduced inaccuracy and confusion for model year verification, but does not comply with the PIN standard and varies by manufacturer.

Perhaps the continued adoption of the PIN over the serial number we observed in the marketplace will eventually force a change by heavy equipment manufacturers and a new standard that mandates the inclusion of a model year designation. It will take a lot of time and effort but the research shows the change is inevitable and eventually equipment professionals will enjoy the benefits of having the standard like auto industry.

Benefits of having a year designated PIN standard:

  • Faster deals for equipment finance
  • Efficient underwriting for inland marine insurance
  • Reliable asset onboarding for online marketplaces
  • Quicker trade-in processes for dealers.