Equipment World Digital Magazine
Issue link: http://read.dmtmag.com/i/860257
was a bloodbath. But that's starting to turn around and come back." Heath Watton, vice president of Southeastern Equipment, a Case dealer in Cambridge, Ohio, says used equipment sales are outpacing new equipment sales in the more rural locales of his sales area, which spans portions of Ohio, Pennsylvania, West Virginia, Kentucky, Indiana and Michigan. "Here in Ohio, you have a nice, robust used market," he says. "There is so much business going on, and there are so many owner-operators," Watton says. As he tracks where his company's used equipment is sold, he sees a clear trend of more used equipment being sold in rural areas and more new equipment sales driven by urban buyers. "Detroit, Michigan; Columbus, Ohio; Cincinnati, Indianapolis, Cleveland – they're new equipment markets," Walton continues. "When you get out into the rural markets where there's not as much industry, a guy is going to buy a used backhoe for $60,000 or $50,000 instead of buying a new one for $110,000." One industry segment seeing strong growth – and the resulting increases in used equipment prices – is telecom, fiber and cable construction. "Directional drills, mini-excavators, cable placers and bucket trucks are all starting to increase," says Sandon. "It's getting harder to find decent used pieces." Is there a Tier 4 effect? Tier 4 Final engine emissions regulations kicked in 2014-2015. In most cases, these newer machines have not entered the used equipment market, so it's still not clear what impact these more expensive machines will have. The looming complication is that most larger Tier 4 machines can't be exported without expensive retrofitting to meet conditions outside the United States. Many of the smaller Tier 4 units (under 75 horsepower), however, are adaptable with minimal to no modifications. Another complication: many non-attainment areas (those considered to have air quality worse than national standards) prohibit the import of older, pre- Tier 2 units, and sales in those areas require export after the sale of these units. This can add relocation expenses on top of the price of an older asset, which will drive up the cost for buyers, says Dan Samford, owner of Peak Performance Asset Services, an equipment consulting and value assessment firm. Samford believes these clean diesel machines should do well when they start showing up in the used equipment stream. "Used Tier 4 iron is desired by the dealers and resellers," he says. "Dealers want this iron back in their inventory to help build their sales inventory options." Olive says pricing for the Tier 4 assets Ritchie has seen on the auction block have been "solid." One reason the used market may not be seeing much Tier 4 Final equipment yet is because the cost of these machines is substantially higher, and most owners are hanging on to them for an extra year or two to make up for it, says Sandon. Emissions regulations approximately doubled the cost of a diesel engine, and while that may not proportionally be a big deal for larger equipment, it substantially drives up the price on smaller machines. "It's most notable with air compressors, especially with older air compressors, such as the 185 Sullairs and Ingersoll Rands," says Sandon. "You used to be able to buy them used for $2,000 to $3,000. Now it's hard to get a used air compressor for under $4,000." A survey by the Independent Equipment Dealers Association of its members late last year indicated an increase in demand for Tier 3 equipment because of the Environmental Protection Agency's Tier 4 emissions. Those responding to the survey reported resale prices of August 2017 | EquipmentWorld.com 22 used equipment report | continued Compact excavator Deere 27D Excavator Cat 320C L Wheel loader Deere 544K Dozer Cat D6N Backhoe Deere 310J Artic Cat 740B Skid steer Bobcat S175 Compact track loader Bobcat T190 Source: TopBid, topbid.com, January through mid-May. Top models sold at auction this year* Contractors were generally steady in their used equipment buying expectations, according to the Wells Fargo 2017 Construction Industry Forecast.