Used-equipment values have plummeted. Rouse Asset Services reports that February orderly liquidation values dropped again, down 3.9 percent from January and 18.2 percent from September.
The economy has certainly driven down prices, with both distributors and rental dealers selling machines at auctions. But how much value has been driven out by the number of “unclean” Tier 0, Tier 1 and Tier 2 machines hitting the market?
California makes no bones about its desire to rid the land of these machines. And as federal stimulus dollars start being used to build projects, be sure that the attached strings will mandate use of clean diesels and emission caps.
We suggested two years ago that equipment managers consider disposing of older machines before the used market was flooded. Of course, we can’t claim to have foreseen the economic cliff dive, but EPA mandates, CARB and the economy have combined to bring home that reality in the used-equipment market.
Executive editor Larry Stewart reports on the necessity of replacing Tier 0 machines in this month’s Running Green article. Equipment professionals we’ve talked with have responded with everything from “I already sold all of mine,” to “Start now.”
One manager points out that waiting will result in additional transportation or shipping costs because fewer fleets will even be able to add Tier 0s to their lineup.
IronPlanet’s Paul Hendrix says he’s not seen any solid evidence of an influx of machines in California bailing out due to compliance issues.
“Because the reduction of non-tiered engines is based on a percentage of total fleet horsepower, the biggest impact a contractor can have on [the used market] is to sell a large, high-horsepower machine rather than selling several small, low-horsepower machines,” Hendrix says .
That means there may still be time to obtain good value out of the dirtiest of the dirty. We’ll say it again: Dispose of your old-tier machines now. Sell while you can still find buyers.
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