Value of construction equipment on the resale and auction markets dipped in June, suggesting some in the industry are wary of how long the U.S. can dodge an economic slowdown.
EquipmentWatch’s August Market Report suggests the concern is present despite the backlog of infrastructure projects increasing three consecutive months to the highest amount in three years.
The monthly report from EquipmentWatch is designed as a resource to help fleet managers make better-informed decisions by leveraging equipment values, age, and usage metrics when considering the sale, auction, or purchase of equipment.
According to the August report, construction equipment fair market values have dipped 4.34% since January, and the forced liquidation value (FLV) is down 10.10% for the same period.
The FLV is defined as the value of an asset sold at a properly advertised and conducted auction in which the seller is under compulsion to sell on an as-is, where-is basis, as of a specific date.
The report states that construction equipment resale values continued their slowdown with a 1.76% month-to-month decline from May to June 2023. Construction equipment values were reported as being up 0.06% from June 2022.
Values on the auction channel also continued their slowdown, dipping 3.16% month-over-month. However, the auction channel maintained a steep increase on a year-over-year analysis with a 27.82% increase in values.
The metrics appear to line up with the Associated Builders and Contractors Construction Confidence Index, which dropped closer to numbers seen in June 2022.
The age of the equipment on the resale market was down 2.65% on a month-to-month basis and down 2.72% from June 2022. The most significant jump in age was from June 2021 to June 2023 at 11.79%.
Previously reported data from EquipmentWatch indicated that the current trend of popular model years included 2015-2019.
On the auction channel, the average age of equipment in June 2023 was 5.13% lower than in May 2023. The monthly decrease compared with a near 10% decline year-over-year.
Overall, the model year range is similar in the resale market as well, with 2015, 2017, and 2016 being the favorite choices. Approximately one-third of firms and fleet owners opt for a particular model year.
The other gauge in both markets is the usage rates. For equipment in resale, usage rates were down 0.18% month-over-month and down 0.01% compared to June 2022.
Conversely, usage rates dipped 3.26% on the auction market from May to June 2023. However, this compared to a 6.47% decline year-over-year and 16.981% compared to June 2021.
The monthly report from EquipmentWatch tracks resale and auction prices for over 15,000 models across 389 manufacturers throughout North America.