There is talk on the dealer side that a new era of equipment distribution will result from current market conditions. Expectations are that we will lose at least 20% of dealers serving the construction industry - maybe more. It is also probable that many who survive will be forced to sell out because they're unable to obtain the capital required to compete on a reasonable level. Add in the result of dealer consolidation in the auto industry - which is sure to carry over to construction equipment dealers - and you wind up with additional dealers leaving the market.

The remaining dealers will offer up state-of-the-art services to their customers and, in turn, cut their costs as part of the process, which is exciting. But for now, contractors needing equipment should be proactive while the equipment situation takes it course.

Opportunities in used equipment
From the contractors' viewpoint, there will be some real deals on new equipment, and maybe even some reasonable financing to go with it. The real deals, however, will be in the used equipment market, since there seems to be an abundance of equipment out there selling at substantial discounts from where they were 18 months ago.

Used equipment deals, which were usually comprised of 5-year-old units, now contain more late-model machines. Dealers are discounting to get rid of old inventory, and there are many attractive units available through the auction process. Since many of the units showing up on the auction block are being placed there by rental companies, now is the time to assess that market by going direct to the rental companies when you need equipment.

Rental companies offer many advantages when it comes to used equipment. They enable you to rent the equipment and try it out before making an offer on the unit. They offer rent-to-sell contracts to those interested in that type of program. They can supply full maintenance records on the units you're interested in purchasing. And, most importantly, they are the most motivated sellers in the market at this time.