Equipment
3Q 2024 Cost Report: Used Iron Prices Continue to Level Off, While OEMs Foresee Slower Sales for Rest of 2024
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Sourcing construction equipment during a busy season can be a pain, but it’s not necessarily going to be from the price tags of used equipment. Despite a rampup during the COVID era, used equipment prices have largely plateaued over the last year, and there are further signs that a slight price dip may even be coming.
“[Used equipment] values are looking pretty stable over the last two years, with some values coming down half a percentage point, and that really signifies to me the stability of the market,” notes Sam Pierce, sales engineer at market sector analyst EquipmentWatch. “We’re seeing that month-over-month as well— it’s been going on for a long time now.”
EquipmentWatch data shows that while construction equipment pricing has been largely stable for some time in resale channels and at auction, there has been a parallel decline in machine age and usage, suggesting that equipment fleets are trending toward regular refreshes, rather than hanging on to old iron. “We are seeing that newer equipment come in,” Pierce points out, adding that its August data versus 2022 shows “age and usage are both noticeably lower, but not by a huge amount.”
In the lift market category, EquipmentWatch saw a slightly different picture, since it includes construction users and market sectors. “You can see in resale there is newer equipment being sold, and usage is significantly lower than in the last year or two,” Pierce says. “In auction, we’re seeing more heavily used equipment.”
Original equipment manufacturers have reported profits in recent quarters, although there has been a slowdown in sales volume. Caterpillar adjusted its outlook downward for the rest of 2024 during its second quarter earnings call Aug. 6, citing among other factors, slightly lower than expected sales in construction.
“In North America, sales to users were slightly lower than anticipated 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 were up as demand for new housing remained resilient.” He added that 2023 was a banner year in sales of construction equipment for Caterpillar, so it’s a slight decline from a record high.
John Deere reported a similar contraction in uptake of new construction equipment, citing a 13% decline in year-over-year net sales for the third quarter. In an Aug. 15 quarterly result call, company executives cited volatility in construction sales.
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While roadbuilding equipment sales have been steady, Deere saw lower than expected demand for earthmoving equipment, which it ascribed to users’ competitive job bids and difficulty in securing favorable financing due to high interest rates.
“That means that while still profitable, many customers are experiencing lower profitability compared to just a year ago,” said Josh Beal, Deere director of investor relations.
Echoing Caterpillar, he added that “[rental] spending has diminished with investments in construction equipment at multiyear lows following years of robust re-fleeting.” As a result, Beal said, Deere plans to underproduce construction equipment through the end of 2025 to avoid a glut of machines at retail.
