As rental companies compete to offer the youngest booms, scissor lifts and telescopic forklifts, they often overlook the huge liability sitting in their yards - nonproductive used equipment. If used equipment presents a financial challenge, however, it offers an even greater opportunity. While the vast majority of the rental industry focuses on its core business - renting equipment - there is a competitive advantage for those who learn to efficiently turn their fleets over and remove depreciating equipment from their books.
All rental companies have depreciation schedules. While a maintenance-intensive 60-foot boom might last four to five years, scissor lifts can enjoy up to seven years of useful life. But what happens to this equipment once it’s no longer “young enough?” Often, maintaining and renting this equipment costs more than simply letting it sit in the yard. Rental companies might try to sell it at retail, a process that takes an average of 120 days. Meanwhile, the equipment continues to depreciate. Selling that machine in a month, however, can mean substantial reductions in cost.
Between $600 and $800 million of used equipment from the top six national rental chains alone ends up at auction each year, as companies look to turn 20 percent of their fleets annually. But are traditional auctions
the most profitable way to sell used equipment? While live auctions have been around for decades, today’s fleet managers are increasingly turning to the Internet to sell used equipment.
An international scope
While a live auction usually draws local and regional buyers, online auctions are not restricted to a geographic location and do not require face-to-face interaction. Instead, online auctions provide an international bidding audience, allowing thousands of visitors to view or bid on a piece of equipment. For those looking to sell aerial work platforms and material handling equipment, larger audiences typically generate more bids per item and ultimately a better price. Additionally, international buyers typically pay 8 to 10 percent more than their domestic counterparts. Online auctions also allow sellers to take advantage of equipment shortages in the worldwide marketplace.
For example, while domestic prices remain stable on used booms and scissor lifts, this equipment often still enjoys good prices at auction primarily because of international demand. Even used equipment experiencing a downward trend in value, such as 6,000- and 8,000-pound telescopic forklifts, could generate better price realizations online.
Some potential buyers might still be wary of purchasing over the Internet, however. Unlike live auctions, most buyers are not able to personally inspect the equipment prior to purchasing it. In the often “buyer beware” cyber world, used heavy equipment carries a large price tag. Buyers cannot afford to pay for equipment that doesn’t exist or is not in the condition listed. When purchasing equipment online, it’s important to choose a company that stands behind its equipment. Look for an auction company that offers free equipment inspections, including a visual inspection of key components, equipment-specific wear-related measurements and, when appropriate, oil/fluid samples that have been analyzed in a lab. A thorough, guaranteed analysis by a trained professional can actually yield a better overall picture of equipment condition. For the buyer, this means access to the information needed to make an informed bid, and confidence that the item is represented fairly.
A different fear might sometimes exist for sellers. While buyer apprehension focuses on equipment condition, sellers want a guarantee of prompt payment. Online auction services where the buyer pays the seller directly put both parties at risk. A secure payment and equipment delivery process, however, relieves anxiety for both the buyer and seller. This transaction comprises the most significant component of online auctions. Sellers should look for an online auction company that can verify and guarantee payment, and buyers should utilize auction services that provide a secure method of transportation and delivery.