Tips for getting the most out of the used equipment market.
1. Wait Until Spring to Shop
After a historically low period of used equipment auctions, the market is slowly creeping back to its pre-recession rates. Starting in June of 2015, the number of machinery auctions began to rise and have continued to increase. According to data and trend analysis released by Machinery Pete, we could be returning to an auction price pattern similar to the golden days of 1989-2006. During that time period, machinery prices started strong at the beginning of the year and began to soften by the start of spring until mid-fall. So if you’re looking to find the best prices on used equipment, wait until at least mid-March to start searching.
2. Be Smart About Leasing
Throughout 2015, the idea of leasing equipment became more and more appealing for companies dealing with tight budgets. By leasing equipment instead of purchasing it, buyers can save money while still benefiting from the manufacturer’s warranty for necessary repairs as if they purchased it. If you want to avoid the loan process and try leasing equipment instead of purchasing, be sure to consider the amount of time that you’ll actually need the equipment. Once you sign a lease agreement, you will be committed for that time frame. Also, be sure to realistically figure out the number of hours you will use the equipment, as there are “excess usage charges” for going over your agreed limit.
3. Look for Late-Model Used Equipment
Throughout 2016, the opportunity to purchase late-model used equipment will increase. Many dealers are sitting on huge inventories of used equipment, hence the increase in the number of auctions mentioned earlier. However, you shouldn’t wait to make a purchase, as many buyers took advantage of the low prices of late-model equipment in the first half of 2015, causing the prices to spike by the second half.
4. Slow Sales of New Equipment Will Impact the Used Market
As previously mentioned, the surplus of 1-3 year old equipment makes for some great deals through 2016, but beware, this trend will not continue. For the past couple of years, the market for new equipment has been somewhat stagnant. Increasing prices for newer equipment has encouraged many buyers to gravitate toward leasing and rental options. While this was great for the leasing and rental markets, it could have a lasting impact on the used machinery market. With fewer sales of new equipment, there will be fewer options for two to three-year-old models in the used equipment market for the next few years.
5. Take Care of the Equipment You Have
The implementation of the Environmental Protection Agency’s regulations to reduce the emissions of diesel engines has brought forth a new era of technological innovation to meet the requirements. However, all of this new technology has left many buyers longing for the old days. Surprisingly, with so much new, sophisticated machinery available on the market, the demand for older, simpler machinery has never been higher. So even if you’re not looking to upgrade your equipment this year, remember that taking good care of it now could lead to a big pay off a few years down the road.