Asking and auction values for medium-duty construction equipment drifted further apart in July as the value gap neared historic levels amid rising inventories and delayed market reaction.
Asking values for used, medium-duty construction equipment declined 0.2% month over month and 2.7% year over year in July, according to Sandhills Global auction market data. Medium-duty construction auction values also slid, down 2.8% MoM and 7.9% YoY, further widening the gap between the value sets to near historic levels.
“When you get on the side of the medium-duty construction, the gap is widening right now,” Jim Ryan, equipment lease and finance manager at Sandhills Global told Equipment Finance News. “As dealers start to react to the inventory levels and change their pricing, you’ll start seeing that gap close again.”
Inventory for medium-duty equipment rose 5.9% MoM and 45.8% YoY in July, according to Sandhills. Medium-duty construction supply recovery continues to outpace the heavy-duty construction market, with track skid steers and mini excavators leading the jumps in supply.
The transportation industry saw a similar trend in terms of inventory and values earlier this year, Ryan said. Increased demand for medium-duty construction equipment in the rental industry also contributed to the increase in inventory and decline in values.
“You’re seeing inventory levels in the medium-duty increase. … New inventory is becoming readily available to a lot of rental companies, so they’re cycling out old inventory,” he said. “That’s what you see on the medium-duty side, those inventory levels quickly growing and a lot of correlation to the rental companies as well.”
Heavy-duty construction values down YoY
Asking and auction values for used, heavy-duty construction equipment ticked up on a sequential basis but remained below last year’s levels. Asking values increased 0.9% MoM but declined 3.3% YoY, according to Sandhills. Auction values inched up 0.5% MoM but dropped 5.4% YoY.
“Auction and retail values on the construction side have slowly decreased again, seeing the same correlation with the inventory levels slowly increasing and values slowly decreasing,” Ryan said. “It’s nothing drastic on that side; it’s been a steady decline in values and an increase in inventory.”
Inventory for heavy-duty equipment also rose 4.1% MoM and 7.4% YoY in July, according to Sandhills. Inventory for heavy-duty construction equipment continued to trend upward, but at a slower rate than medium-duty construction equipment or other equipment markets.
“On the heavy-duty construction side, it’s never been your drastic increase in inventory levels, like you’ve seen on the truck and the ag side,” Ryan said. “It’s been a steady increase since [second quarter] of last year.”