Prepare for Purchasing

Jan. 6, 2015

We’ve tracked fleet trends over the past few years, and 2015 could be the year expansion and replacement begin anew. Although this excites manufacturers and dealers, equipment managers will have some additional aspects to consider as they acquire new machines.

According to our Annual Report & Forecast data, fleet managers have slowly started to look at replacing and expanding their fleets. We think 9 to 10 percent is a healthy replacement rate, and the industry hasn’t been in that neighborhood since our 2008 Report. Instead, the rate hovered around 5 percent through 2012 before rising to 8.7 percent in 2014. As soon as confidence (a highway bill will help) fully returns, expect that rate to break the 10-percent barrier.

Fleet expansions have followed the same trend, although we expect that rebound to lag replacement rate.

As fleets expand or replace machines, the new-equipment landscape has a few changes worth considering. This year, all new engines must comply with Tier 4-Final regulations. The machines housing those powerplants will be more expensive; the hardware under the bonnet will be more extensive. Equipment professionals should expect higher purchasing costs, and they should anticipate changes in their maintenance practices and operating costs. On the other hand, new machines promise to be more efficient and more productive. Managers should evaluate cost per unit of work against the purchase price.

New machines will be equipped to provide data for monitoring operating costs, too, as telematics hardware now is standard on most machines. With initially free service, there’s no reason not to use the data. The time for telematics is upon us. Managers should determine which data to track and how to use it effectively.

Telematics data and emissions technology will require even closer partnerships with fleets’ dealers. Dealers can monitor machines, they have highly skilled technicians, and they will be offering more comprehensive fleet-management services as they, too, determine how telematics can benefit their customers’ productivity and operating costs.

In addition to the technological developments, fleet managers have an array of manufacturers from China making a play in the North American market.

As we’ve talked with fleet managers during the Great Recession, we’ve noticed that some are monitoring developments more closely than others. The majority, however, have stayed at the periphery, surviving the recession, and only now are facing the new landscape in construction equipment acquisition.

This year promises to bring out the best in asset-management strategies. Analysis will be required not only of machine technology, but also overall fleet management.

About the Author

Rod Sutton

Sutton has served as the editorial lead of Construction Equipment magazine and since 2001. 

Our mission is to help managers of heavy equipment and trucks to improve their performance in acquiring and managing their fleets. One way we do that is with our Executive Institute, where experts share information and ideas that will enable equipment managers to accurately manage equipment costs so that they can deliver the optimum financial benefits to their organizations.

We also have a laser focus on product development, performance, and technology; as well as equipment acquisition, disposal, and maintenance. Our exclusive Field Tests take earthmoving equipment and truck into the field for professional evaluations.

Check out our free newsletters to see the latest content.

You can find Sutton on LinkedIn.