Soaring inventory continued to depress used construction equipment values in June, with skid steers driving the surge in the medium-duty equipment market.
Rental returns and an overall slowdown in construction activity contributed to elevated inventory levels, Sandhills Global Equipment Lease and Finance Manager Jim Ryan told Equipment Finance News.
“Your contractors may not have the jobs this year that would require that equipment,” he said. “You are seeing dumps like that from contractors getting rid of stuff that they’re not using this summer.”
Rising inventory in June further reduced asking and auction values for used construction equipment, prolonging a trend that started in the summer of 2022, according to Sandhills Global’s monthly indices.
Medium-duty equipment
- Used inventory increased by 51.9% year over year in June and 7.6% month over month;
- Skid steers remained the driving force behind the swell of inventory, following YoY increases of 82.3% in April and 73.9% in May.
- Auction values fell by 11.6% YoY, while asking values dropped 7.2% YoY, adding to consecutive months of decreases.
Heavy-duty equipment
- Inventory continued to rise in June but at a slower rate than medium-duty equipment, registering gains of 21% YoY and 4.2% MoM; and
- Auction and asking values fell by 9.6% YoY and 5.4% YoY, respectively.
Used lifts
- Inventory rose 11.3% YoY in June and is trending upward; inventory was up 5.3% from the previous month;
- Like used construction equipment, used lifts have been steadily depreciating in conjunction with soaring inventory since 2022; and
- Auction values were down 14.8% YoY, while asking values dropped 9.1% YoY.
Mega projects stymie smaller equipment demand
Mega-construction projects have contributed to soaring inventory in the medium-duty equipment market, Ryan said. As multi-million-dollar companies embark on large-scale residential jobs, demand for smaller equipment remains relatively low.
“Those guys doing residential-type build-outs are not using the same type of equipment that somebody’s doing bridge work on, so the equipment is different there,” he said.
Moreover, larger construction companies can afford to sit on equipment for longer even if they go several months without using it, while smaller contractors may look to offload unused equipment to increase cash flow, Ryan added.
Despite rising inventory, the heavy-duty equipment market is comparatively stable in light of these trends.
“Heavy-duty stuff is still being used, so you don’t see quite as big a jump as you do the medium-duty,” Ryan said.
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