When the COVID-19 pandemic first hit in early 2020, many fleet managers took a wait-and-see approach, hoping that the year’s construction season would not be lost entirely. But more than a year of working through supply chain disruptions and inconsistent deliveries has taken a bit of a toll on the equipment market, according to the latest data from analytics firm EquipmentWatch.
“The two main things I see linked in all of this are lower [machine] activity and increases in [equipment] age,” says Heather Messing, the firm’s analytics lead. A recent survey of its subscribers found more than half had experienced delays in deliveries of new construction equipment. “It’s because of all the reasons we read about every day—supply chain disruptions, trouble getting deliveries over the oceans—that all is trickling down to the used equipment market, as people waiting to get new machines are not selling off the old,” she says.
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The trend toward older machines is seen in August market data collected by EquipmentWatch, which found the average age of construction equipment has risen 12% in resale and 14.1% in auctions. “Resale age being up 12% year-over-year is a pretty big jump,” says Messing. “Because the average age has gone up, it kind of skews the equipment values a bit, since we’re not comparing the same basket of models—everything is kind of older now.” Messing adds that while machine age has increased, utilization has only gone up slightly, perhaps reflecting the disrupted construction season of 2020.
EquipmentWatch’s data is compiled from a variety of public and proprietary sources across North America, and encompasses most types of construction equipment. Its analytical taxonomy normalizes the collected data to eliminate outliers, and accounts for industry trends such as specific brand premiums and regional pricing trends.
Messing has kept an eye on the average age as it ticks up. While scarcity is not at a crisis point, she does expect strong resale and auction pricing to continue as equipment manufacturers struggle to overcome supply chain issues. “I haven’t heard OEMs [original equipment manufacturers] saying that their supply chains will straighten themselves out, so it’s hard to make the argument that there will be a return to normal pre-pandemic [pricing] levels any time soon.”
Machine utilization dipped slightly in 2020, but 2021 has seen construction activity in the U.S. ramp back up, and many firms that went out to refresh their fleets earlier this year were surprised by the relative scarcity of equipment. These supply chain issues can also be seen in the agricultural and lift equipment sectors which EquipmentWatch also tracks, notes Messing. “If you haven’t looked in a while, you might be surprised that there are not as many options available [on the resale/auction market] as in years past,” she points out.
But on the other side of the equipment equation, that means it’s a bit of a seller’s market for equipment owners right now. “If you are going to sell now you will get a good value for it,” Messing adds.