- Recent developments in the construction and agriculture equipment sectors have drawn attention, as equipment values fluctuate.
- Lift/access equipment segment shows steady year-over-year gains.
- The construction industry’s overall pause aligns with economic indicators, while the agriculture equipment market remains steady.
Resale and auction markets serve as barometers for industry trends and economic performance in the heavy machinery and equipment sectors. Lately, intriguing developments in the construction and agriculture equipment industries draw the focus of fleet managers, industry experts, and buyers.
In this article, we will explore these fluctuations in equipment values, shed light on the factors driving these changes, and present solutions to maximize the value of your equipment. By incorporating cutting-edge construction equipment management software into your toolkit, you can streamline maintenance, depreciation tracking, and equipment valuation, leading to more informed decision-making and higher returns on your investments.
Construction Equipment: Weathering the Pause
The construction equipment market has experienced a stall in both resale and auction channels, pointing to an anticipated seasonal slowdown. Fleet managers are adapting to the situation by holding onto their aging equipment and putting it to good use.
The lift/access equipment segment is witnessing steady value gains both year over year and month over month. Fair Market Value (FMV) recorded an impressive 11.9% gain, and Fair Liquidation Value (FLV) skyrocketed by 37.2% compared to the previous year. This surge indicates a promising outlook for the industry, bolstered by increasing infrastructure projects.
Construction Industry Backlog and the Equipment Market
The construction industry’s overall pause is in line with the findings of the Associated Builders and Contractors Construction Backlog Indicator. Sales, profit margins, and staffing levels have experienced slight decreases in June. However, all three indicators remain above the threshold of 501, signalling expectations of growth over the next six months. With significant infrastructure projects commencing, many stakeholders are hopeful for a stable and robust second half of the year.
Connection with Economic Indicators: The construction industry is closely tied to economic health. Backlog indicators and readings on sales, profit margins, and staffing levels can provide valuable insights into the broader economic outlook.
While original equipment manufacturers (OEMs) are catching up with their backlogged orders, the used equipment market remains steady, with prices normalizing.2 This is encouraging news for both buyers and sellers, as it signifies a balanced market.
Lift/Access Equipment: Reaching New Heights
The lift/access equipment segment is experiencing a positive trend in 2023. Values, usage, and age in the resale channel have seen continuous increases throughout the year. Experts in the aerial lift industry are optimistic about its trajectory, despite labor constraints, rising costs, and supply chain challenges.
Connection with Technological Advancements: The aerial lift industry is continually evolving, with advancements in technology enhancing the capabilities and efficiency of equipment. This progress contributes to the sector’s steady growth and ensures its relevance in various applications.
In the auction channel, although there has been a slight dip of -1.4% month over month, year over year values have soared by 37.2%. This substantial increase, along with a remarkable 57.8% rise compared to May 2021, highlights the enduring strength of the lift/access equipment market.4
Agriculture Equipment: Steady Amidst Uncertainty
The agriculture equipment market is poised for a successful year, primarily due to high projected farm income levels driving sales. However, the resale and auction channels have both shown signs of a possible slowdown.
Connection with Agricultural Trends: The agriculture industry is susceptible to various factors, including weather conditions, commodity prices, and government policies. High projected farm income levels indicate favorable conditions, while potential slowdowns could be influenced by market fluctuations and trade dynamics.
After a robust start in 2023, FMV for agriculture equipment has stabilized, while FLV has seen a slight dip of -0.8% month over month.4 Despite the recent downtrend, year over year values remain strong, creating an advantageous environment for sellers.
The recent fluctuations in construction and agriculture equipment values are indicative of broader industry trends and economic conditions. While construction equipment is experiencing a pause, lift/access equipment is soaring to new heights, and agriculture equipment maintains steady growth. These dynamics highlight the resilience of the heavy machinery market and its ability to adapt to changing circumstances.
Connection with Interconnected Industries: The construction and agriculture equipment sectors are interconnected with various other industries, such as real estate, manufacturing, and transportation. Understanding these interdependencies can provide a more holistic view of the equipment market and its broader impact on the economy.
For fleet managers, industry experts, and buyers, staying informed about these trends and understanding the factors shaping the market will be crucial for making informed decisions and navigating the ever-changing landscape of construction and agriculture equipment values. Moreover, the ability to recognize connections with other industries will aid in developing a well-rounded approach to construction equipment management and investment strategies.
Incorporating Construction Equipment Management Software: Enhancing Maintenance, Depreciation, and Equipment Value
Managing a fleet of construction equipment can be a challenging task, especially when it comes to maintaining, tracking depreciation, and assessing the value of each asset. With the advancements in technology, construction equipment management software has emerged as a powerful tool that can significantly streamline these crucial processes. Let’s explore how incorporating such software into your toolkit can bring efficiency and clarity to your equipment management practices.
- Streamlined Maintenance Tracking
One of the primary benefits of construction equipment management software is its ability to streamline maintenance tracking. Regular and timely maintenance is vital for prolonging the life of equipment and ensuring its optimal performance. The software allows you to schedule and monitor maintenance tasks, track service history, and receive maintenance reminders, ensuring that your equipment stays in peak condition.
By adhering to a well-organized maintenance schedule, you can reduce unexpected breakdowns, minimize downtime, and avoid costly repairs. This proactive approach not only improves equipment reliability but also positively impacts the resale value of your assets in the long run.
- Precise Depreciation Management
Equipment depreciation is a critical aspect of asset management, directly influencing financial planning and decision-making. Construction equipment management software automates the depreciation tracking process, making it more accurate and efficient. The software considers factors like acquisition cost, useful life, and salvage value to calculate depreciation based on industry-standard methods such as straight-line or declining balance.
Having a precise understanding of equipment depreciation allows you to make informed decisions about when to retire or replace equipment. It also helps with accurate financial reporting and ensures compliance with accounting standards.
- Real-Time Equipment Valuation
Understanding the current value of your construction equipment is essential for multiple purposes, including financial reporting, insurance coverage, and investment assessments. Traditionally, determining the value of equipment could be a complex and time-consuming task. However, with the integration of construction equipment management software, this process becomes more streamlined and accurate.
The software can gather data from various sources, such as equipment usage, maintenance history, and market trends, to assess the real-time value of each asset. This data-driven approach ensures that you have an up-to-date and comprehensive view of your equipment’s worth, helping you make well-informed decisions about equipment sales, purchases, or lease agreements.
- Improved Asset Utilization
Construction equipment management software not only aids in tracking individual equipment but also provides valuable insights into the overall performance and utilization of your fleet. You can identify underutilized assets, assess their profitability, and adjust to optimize their usage.
By maximizing asset utilization, you can reduce unnecessary expenses and improve operational efficiency, leading to higher returns on your investments. Additionally, better asset utilization positively impacts the longevity of your equipment, contributing to higher resale values down the line.
Maximizing Equipment Value:
Incorporating construction equipment management software brings numerous benefits to enhance equipment value and profitability. Streamlining maintenance tracking ensures optimal performance and increased resale value. Precise depreciation management aids in strategic decision-making and accurate financial reporting. Real-time equipment valuation empowers well-informed sales and investment assessments. Improved asset utilization optimizes fleet performance and efficiency, resulting in higher returns on investments and prolonged equipment longevity. By leveraging cutting-edge technology, construction companies can navigate the fluctuations in equipment values with confidence and stay ahead in a competitive market.