Equipment lenders are using metrics like retail comps to find specific used construction equipment items that are in high demand as the overall market stabilizes.
Analyzing comparable store sales is one way for lenders to capitalize on hot-ticket items and mitigate risk, Paul Fogle, managing director at Carmel, Ind.-based Quality Equipment Finance, told Equipment Finance News.
“The comps will tell you how hot the market is.”
— Paul Fogle, managing director, Quality Equipment Finance
“So, we look at retail costs, we look at auction values,” he said. “If prices are dropping or they’re very low, and there’s a ton of supply out there, that really tells you how the market is looking at the inventory.”
Quality Equipment analyzes price fluctuations in four-year increments to determine current and projected demand for certain equipment, Fogle said. The lender also looks for any outlier deals that may have skewed the overall metrics, he said.
In addition, equipment lenders evaluate seasonality and the most prevalent types of construction projects to find growing niches within the used-equipment market, John Gougeon, president of Ann Arbor, Mich.-based UniFi Equipment Finance, told EFN.
“Scrapers and motor graders are kind of bellwethers for large construction projects,” he said. “So, you can look at the scraper market, particularly in the auctions in February, and see how scrapers are selling to get kind of an indication of what the buyers are doing. And that is a broader indication of what the market will look like for the summer.”
Sandhills Global’s used-equipment trends
Meanwhile, the used heavy- and medium-duty construction markets continued to stabilize in April as inventory declined month over month, while the used lift market struggled, according to Sandhills Global’s May 6 report on used-equipment trends.
Used heavy-duty equipment
- Inventory fell 1.4% year over year and 0.8% MoM;
- Crawler excavators drove the decrease, falling 5.4% YoY and 1.9% MoM;
- Asking values dropped 3.3% YoY and 0.2% MoM; and
- Auction values declined 2.4% YoY and 0.6% MoM.
Used medium-duty equipment
- Inventory rose 0.9% YoY, but fell 2.1% MoM;
- The mini excavator segment saw the largest inventory decline, down 9.9% YoY and 6.1% MoM;
- Asking values decreased 3.2% YoY, but increased 0.5% MoM; and
- Auction values dropped 1.5% YoY but rose 0.2% MoM.
Used lifts
- Inventory increased 16.2% YoY and 1.7% MoM;
- Asking values declined 8.2% YoY, but rose 0.4% MoM; and
- Auction values decreased 4.9% YoY and 1% MoM.
Dealers still growing rental fleets
Equipment dealers are capitalizing on the growing rental market and have expanded their rental fleets in recent years as high interest rates and evolving consumer behaviors hinder purchasing.
Economic uncertainty and potential price hikes from tariffs are expected to further drive rental demand at dealerships, Sandhills Global Equipment Lease and Finance Manager Jim Ryan told EFN.
“Fortunately, rental prices have been fairly stable, but ultimately, you’re going to see a boost in that rental price side,” he said. “And I think that’s where a lot of consumers will end up going just with a lot of the uncertainty. … You’re going to capitalize on the market when it’s hot. You’re going to raise your prices, and you’re still going to be able to succeed.”
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