Construction equipment dealers are using OEM discounts and incentives to offload new equipment as high interest rates and tariff uncertainty loom over the industry.
New construction equipment sales rose 5.5% year over year in the first quarter, according to a report by heavy-equipment research firm IronAdvisor Insights, which comprised responses from dealers representing 150 locations. That followed a 2.9% YoY decrease in Q4 of 2025.
Large construction OEMs are offering similar discounts, sometimes as much as 15%, to help move new equipment, IronAdvisor Director of Research Jarrett Harris told Equipment Finance News.
“There’s no one manufacturer that’s undercutting the market. It is across the board. Every dealer, every different color flag they’ve got outside, they are seeing pretty significant incentive activity from OEMs.”
— Jarrett Harris, director of research, IronAdvisor Insights
Other incentives include interest-rate buydowns, extended warranties and other parts and service agreements, he said.
The price cuts occurred as nearly one-third of dealers reported excessive inventory in Q1, down from nearly 75% in the previous quarter, according to the report. More than 50% expect lower inventory in the next 90 days. However, some OEMs are threatening to cancel discounts if order targets aren’t met.
Impact on used market
While OEM incentives are boosting new equipment sales, this strategy can hinder the used-equipment market, Harris said.
“Why buy a $60,000 used asset at an 8% interest rate if you can buy a $70,000 new at 0%?” he said. “From a monthly payment standpoint and overall cost of ownership, you’re going to be better off that way. So, for the time being, it seems like the construction OEMs are more focused on moving new iron versus used.”
Dealers burdened with excess used inventory are crafting “surprisingly aggressive deals for marginally qualified contractors” who can’t afford to buy new, Mark French, president of Atlanta-based equipment lender Crest Capital, told EFN.
“This creates a sweet spot for lenders who understand both the real value of used equipment and small contractor economics.”
— Mark French, president, Crest Capital
Challenges ahead
Despite recent momentum in the construction equipment market, there are concerns about President Donald Trump’s tariffs, with some dealers mentioning potential price hikes, buyer hesitancy and supply chain disruptions, according to the report.
And while large construction projects such as data centers and other infrastructure are supporting equipment demand, high interest rates could slow construction activity, Harris said.
“In terms of those growth drivers in the construction world, there is activity, but I think we’re still very much living off of yesterday’s projects,” he said. “I think the backlogs are still solid, but the expectation from dealers and project developers was we were going to get interest rate cuts. And now, that’s sort of in question.”
The third annual Equipment Finance Connect at the JW Marriott Nashville in Nashville, Tenn., on May 14-15, 2025, is the only event that brings together equipment dealers and lenders to share insights, attend discussions on crucial industry topics and network with peers. Learn more about the event and register here.
