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Rental vs Non-rental Equipment: Price Analysis Reveals Best Time to Buy

There is a significant shift in prices as age increases between rental and non – rental equipment.

[su_box title=”This graph shows the average price between non–rental equipment and rental equipment with a 95% confidence band around the non–rental equipment average price.” box_color=”#ddd” title_color=”#000000″][/su_box]

Key Takeaways for Decision Makers

BUYER: From this analysis, we can see that it seems a better choice to buy non-rental equipment before it reaches 5 years of age since it will have lower meter reads than comparable equipment coming off rental markets. However, once the equipment passes the five-year mark, rental equipment may be the better choice.

When purchasing used construction equipment, there are various elements to consider. The manufacturer, age of the equipment, and utilization are key factors when making the decision. One element that may not be considered often is the equipment’s seller. Is it more advantageous to buy from certain contractors, rental companies, or some other construction entity?

Analyzing rental equipment sold on the resale market, we found that crawler mounted compact excavators are popular pieces of equipment. An analysis of 120,000 data points from EquipentWatch Values, was conducted to determine if there is a difference between equipment coming off the rental market (rental equipment) vs non – rental equipment. The analysis determined there were notable differences in the pricing trends and meter reads.

Most crawler mounted compact excavators enter the market at 4 years of age, with an average age of 6 years old. The prices are very similar between both the rental and non-rental companies as they enter the market, but begin to diverge as age increases. The average difference between the rental and non – rental equipment price is 23.7% with the largest gap at age 8 of 40.7%.

The average is an important statistic when estimating various parameters, but the variance is equally as important. Variance measures the spread of the data, and by creating confidence intervals using variance, an analyst can get a measure of how extreme values can be. Looking at the above graph, we can see that the band encompasses the rental average everywhere besides age 7 and 8. Therefore, it is likely a buyer can find pieces of non – rental equipment pricing as low as rental equipment in the early ages of crawler mounted compact excavators. As the age increases, we can see the gap between rental prices and non – rental prices begin to grow.

[su_box title=”An evaluation of meter reads of non-rental versus rental equipment shows that most of the utilization for rental equipment occurs in the first 4 years.” box_color=”#ddd” title_color=”#000000″][/su_box]

Utilization is another important factor when determining prices [Read “Price Determination: Utilization or Age?” for an in depth analysis]. Looking at the utilization between rental and non-rental, we can see if the differences in prices can be determined by the meter reads of the equipment. The graph depicts that rental equipment’s utilization, on average, is different than non – rental equipment. The graph indicates that most usage for rental equipment occurs within its first four years. After that, the usage begins to slow down. For non – rental companies, utilization is what would be expected, a steady increase as time increases.

This analysis has focused on only two major attributes of a buyer’s decision-making, price and utilization. From this analysis, we can see that it seems a better choice to buy non-rental equipment before it reaches 5 years of age since it will have lower meter reads than comparable equipment coming off rental markets. However, once the equipment passes the five-year mark, rental equipment may be the better choice. For more information on other attributes that may affect the value of equipment, check out EquipmentWatch Values extensive adjustments capabilities.

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