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Sourcing construction equipment during peak season can be a pain, but it won’t necessarily be from the price tags of used equipment. Despite a surge during the COVID era, used equipment prices have largely leveled off over the past year, and there are more signs that even a slight drop in prices may be on the way.
“[Used equipment] values seem pretty stable over the last couple of years, with some values dropping half a percentage point, and that really means market stability to me,” notes Sam Pierce, market sector analyst sales engineer EquipmentWatch. “We’re also seeing it month after month; It’s been a long time coming.”
EquipWatch data shows that while construction equipment prices have largely held steady for some time in resale channels and at auctions, there has been a parallel decline in age and ‘use of the machines, suggesting that fleets of equipment tend to be updated periodically, rather than remaining old. iron “We’re seeing newer equipment coming in,” Pierce notes, adding that his August data from 2022 shows that “age and usage are noticeably lower, but not by a large amount.”
In the elevator market category, EquipmentWatch saw a slightly different picture, as it includes construction users and market sectors. “You can see in resale that newer equipment is being sold and usage is significantly lower than it has been in the last year or two,” says Pierce. “At auction, we’re seeing more used equipment.”
OEMs have reported profits in recent quarters, although there has been a slowdown in sales volume. Caterpillar cut its outlook for the rest of 2024 during its second-quarter earnings call on Aug. 6, citing, among other factors, slightly lower-than-expected sales in construction.
“In North America, user sales were slightly lower than expected, primarily due to weaker-than-expected rental fleet loading,” said Caterpillar CEO Jim Umpleby. “Government-related infrastructure projects remained healthy. Residential sales to users in North America increased as demand for new housing remained resilient.” He added that 2023 was a strong year for construction equipment sales for Caterpillar, which which is a slight decline from an all-time high.
John Deere reported a similar contraction in the use of new construction equipment, citing a 13% drop in net sales year-over-year for the third quarter. In an Aug. 15 quarterly earnings call, company executives cited volatility in construction sales.
While sales of road construction equipment have been steady, Deere saw lower-than-expected demand for earth-moving equipment, which it attributed to competitive job offers from users and the difficulty to obtain favorable financing due to high interest rates.
“This means that while they are still profitable, many customers are experiencing lower profitability compared to just a year ago,” said Josh Beal, Deere’s director of investor relations.
Echoing Caterpillar, he added that “[rental] spending has been reduced with investments in construction equipment at multi-year lows after years of robust replenishment.” As a result, Beal said, Deere plans to underproduce construction equipment through the end of 2025 to avoid an excess of retail machines.
