Inventory for medium-duty equipment rose 9.2% MoM and 42.8% YoY in June, according to Sandhills. Medium-duty construction supply continues to trend upward at an increasing rate, outpacing the heavy-duty construction market.
“The medium-duty equipment — backhoes, skid steers, those smaller excavators — saw a heavy increase in inventory,” Jim Ryan, equipment lease and finance manager at Sandhills Global, told Equipment Finance News. “Values continued to trend downward a little bit, but nothing drastic on the construction side. You’re seeing different pockets of inventory start popping back into the market, and this month, it was medium-duty construction.”
Asking and auction values for used, heavy-duty construction equipment also declined in June, with asking values dropping 2.2% MoM and 4.9% YoY. Auction values declined 3.1% MoM and 6.9% YoY, according to Sandhills.
Inventory for heavy-duty equipment, which includes crawler excavators, dozers and wheel loaders, rose 2.6% MoM and 3.5% YoY in June, according to Sandhills. Inventory for heavy-duty construction equipment is also trending upward, but at a slower pace compared with medium-duty construction equipment.
“Inventories on the construction side have been pretty steady,” Ryan said. “You’re going to have your ebbs and flows, and [inventory] is up a little bit on the heavy-duty side.”
Construction crossovers, seasonality
Construction equipment’s ability to cross over into other industries is one of the reasons that values tend to be more stable, Ryan told EFN.
“On the construction side, we really haven’t seen a ton of drastic value drops like we’ve seen on others as there’s a lot of cross-market there,” he said. “If you’re in the [agricultural] sector, you’re going to use a skid steer backhoe or a forklift.
“You don’t see a lot of crossovers in a sleeper, fleet or maintenance truck; you’re not going to see a construction company or contractor buy a sleeper truck [since] those are more niche to the fleet and maintenance market. Once you get into the construction and lift side, there’s a lot of crossovers across industries,” Ryan said.
Lower demand during summer months could also play a role in current market values, Ryan said.
“Construction can be seasonal as well,” he said. “You get into the dead of summer, a lot of those construction companies and contractors are on jobs that they are working, so the focus on buying on the construction side becomes limited.”