For each of our 28 award categories, our Values analysts looked at the most popular equipment series observed on the resale channel in 2016. These series were sorted by their relative popularity on the resale channel, and our analysts removed any series without a model currently in production. Only equipment series which consist of at least 1 model contained in the EquipmentWatch Residual Values application were considered.
Once the data had been filtered through these rules, our analysts chose 6 of the top series as finalists, with the restriction that no award category could contain more than 2 equipment series from the same manufacturer.
Calculation of Residual Values
EquipmentWatch’s residual values are calculated according to market depreciation standards. Using the FMV and FLV values contained in the EquipmentWatch Values product, our Values analysts examine year over year depreciation for over 12,000 models with up to 20 model years of values. Using a proprietary algorithm (derived from Multiple Imputation by Chained Equations methodology), our Valuation team is able to use the year over year depreciation calculated in EquipmentWatch Values to estimate residual values up to 84 months into the future.
The residual values used to estimate the HRVA winners receive one additional transformation to normalize the process. Using a curated list of make/model assignments into equipment series, residual value curves for every model in a given series are averaged using a geometric progression. This progression weighs the residual value curve of newer models in the series more heavily than older models, and adjusts these weights as the number of models included in the series increases or decreases.
For example, consider the following table, which shows two hypothetical equipment series (Bill’s and Ted’s) and the estimated 60-month residual value for all of models in the series:
|Series||Model||Residual Value||Weight||Total Value|
(Congrats to Ted’s series, who wins this category 96.38% to Bill’s series at 94.5%).
The sum of the Total Value for each Series is the comparison point for the HRVA competition.