Tier 4 Delays

Tier 4 Delays

May 19, 2011

We saw something similar happen when on-road diesels took their first shot at emissions reduction and it triggered a massive pre-buy on trucks. Truck owners hurried to purchase machines with the old engines in order to avoid the $5,000 upcharge and the new and unknown technologies on those engines.

Similar price increases accompany off-road construction equipment sporting the Tier 4-Interim diesels, and it appears that many fleets are delaying said purchases.

According to our small sampling, nearly half of respondents are delaying machine purchases as an emissions strategy. Slightly less than 20 percent are grabbing Tier 3 machines while they can; that's the closest to a pre-buy we're going to see.

Although we're talking emissions strategy, there is also an economic element. Machine life has lengthened over the past three years simply because they haven't been used. The iron in the yard might have been purchased awhile ago, but there are still many hours of useful life left in it.

Given that many are delaying purchases due to economics, not emissions, we can better understand the percentage of those who will buy Tier 4 machines and those who will rent as needed.

As the old (in years) construction equipment moves back into production, the hours will add up. As that machine comes due for replacement, Tier 4 equipment becomes an option.

Yet I suspect many equipment managers are still going to go cautiously into the market. Until backlogs start building, purchases of Tier 4 machines will lag, and renting will fill those gaps.