Used Machinery Price Drops Following 2022 Peak

According to recent reports, heavy machinery value is on a downward trend in the resale and auction markets.

Ritchie Bros.'s quarterly Lowes Market Trends report and EquipmentWatch's February monthly report both indicate that the value of used construction machinery is declining.

"During the year, we saw continued volume growth in many categories, resulting in pressure on median prices," said Doug Olive, senior vice president of pricing and valuations at Ritchie Bros. "The high demand was felt in the transportation industry. Pressure on sales volume, median price dropped significantly compared to the previous year. We will pay close attention to whether this trend continues into 2024."

According to the Rouse report, retail sales are up 16% in 2023 from the previous year, with total volumes returning to 2019-2020 levels.

However, after peaking in November 2022, the value of machinery in the retail market has fallen by 13% in a year as the availability of new machines eased after several years of supply constraints due to COVID-19. However, after peaking in November 2022, the value of machinery fell by 13% in the retail market. Availability of new machines has eased due to several years of supply constraints due to COVID-19, resulting in a full-year decline of 13%. .

Ritchie Bros. said that despite the decline, overall machinery values remain high, 10% to 15% above long-term historical trends.

Specifically, Ritchie Bros. reports that U.S. wheel loader and articulated truck prices and sales increased in 2023. Additionally, grader prices remained unchanged and sales declined slightly.

Other categories seeing larger sales growth in the U.S. include multi-terrain loaders, skid steers and telehandlers. The median price of these devices was also lower throughout the year.

EquipmentWatch noted that construction equipment fair market value (FMV) experienced the smallest monthly decline, with the value declining from $100,461 to $100,245, a change of 0.54% from November 2023 to December 2023, while the overall value remained lower than in 2022 It rose 3.84% in December.

In contrast, the value of the auction channel also continued to decline slowly, with a month-on-month decrease of 1.22%. The year-on-year analysis was more obvious, with a decrease of 8.02%.

Ritchie Bros. reported similar figures, with Rouse reporting that prices in the used large and medium earthmoving machinery fell by approximately 6% and 17% respectively in the three months to December 31, 2023. Likewise, Ritchie Bros. reported truck tractor prices at 21% and aerospace equipment at 7%.

Falling valuations are considered a potential market correction. Combined with increased usage and shortened lifespans of used machinery, analysts also said the numbers could be a sign of a recovery in overall construction projects.

The machinery usage rate in the auction market increased by 15.75% month-on-month, but still decreased by 10.24% compared with December 2022. Meanwhile, resale-side usage fell 1.47% month-on-month and 9.07% over the 12 months under review.

According to a report by EquipmentWatch, the age of machinery on the resale market decreased by 1.47% month-on-month and 8.31% from December 2022, continuing a continuous downward trend.

On the auction channel, the average age of machinery dropped by 3.38% from November 2023, a monthly decrease, a year-on-year decrease of 7.80%, and a decrease of nearly 15% since December 2021.