80% of construction dealers hit used inventory goals

Used construction equipment is slowly disappearing from dealer lots despite increasingly aggressive incentives for new equipment that make used inventory tougher to sell.  

Eighty percent of construction dealers met used inventory targets in the second quarter, and 90% said demand was steady or improving, according to heavy-equipment research firm IronAdvisor Insights, which surveyed dealers representing 150 locations. 

Stable used-equipment prices and resilience to tariff uncertainty contributed to the positive Q2 results, according to the report. Plus, construction dealers continue to benefit from large commercial developments and strong homebuilding activity in some regions.  

However, the used market is being pressured by aggressive OEM incentives for new equipment, IronAdvisor Director of Research Jarrett Harris told Equipment Finance News.  

The three most common incentives from construction OEMs are interest rate buydowns, extended warranties and technology upgrades, he said. 

“I do think the interest rate buydowns are the most popular vehicle right now,” he said. “As far as the impact on used equipment, it is cannibalizing some used sales. Effectively, you’re getting to that point where the monthly payment is close enough with a 0% interest rate on a new machine as a 4%, 5% or 6% interest rate on a used machine, probably more than that.” 

Promotional financing and special programs are creating a “perfect storm” for new equipment, Kris Realander, sales manager at Morrisville, N.C.-based Triangle Equipment Group, told EFN. 

“We traditionally have had equipment that’s lower hours, 1 to 2 years old,” he said.

“But when you go price for price, coupled with some pretty interesting programs, sales guys would rather sell a new piece than a used piece any day of the week.” 

— Kris Realander, sales manager, Triangle Equipment Group

Nevertheless, 40% of dealers expect used inventory levels to increase in Q3, while 40% anticipate they will stay the same, according to the IronAdvisor report. The potential increase, though, is partly attributed to dealers planning to load up on used machines to capitalize on 100% bonus depreciation and other new tax breaks at yearend.  

Dealers adapt 

OEM incentives are creating a shift in the market that dealers are adjusting to, Realander said. 

“We’re kind of feeding on the bottom end of our late-model equipment,” he said. “So, let’s say we have a 2022 model, those are the ones we’re kind of trying to purge out instead of our late ’23 or early ’24 models because your price point is just too close. Monthly payment is too close.” 

More dealers are also considering transitioning late-model machines into their rental fleets, Harris said.  

“If you’ve got that late-model used asset that now effectively is competing with your new, and the new is moving faster, maybe you roll that into your rental fleet, and rent it out for six months, 12 months,” he said. “You put some more hours on it, generate some revenue out of it, and then you sell it as not low-hour anymore.” 

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