Construction Equipment and Machinery Markets: Euro Auctions Provides a World Roundup for Q1 2012

Jonnie Keys, general manager of Euro Auctions, reviews the world market of new and used construction equipment and machinery, with an insight to what's hot, what's not and who's buying.

Recent events in the global economy have produced surprising results over the last four years. Like water, used machinery and construction equipment has a way of finding its own level and globally, regardless of manufacturing output, used equipment is highly sought after. This results in new markets and emerging demands dictating where machinery is required in the world.

With Caterpillar Inc releasing impressive recent financials for 2011, the thirst for used machinery and equipment seems unquenchable. At the end of 2011, the expectations for market activity in early 2012 was optimistic, and now with the first quarter (Q1) of 2012 behind us, what is the feeling in the market for the rest of the year and what has the market to offer?

Worldwide

In the downturn, many producers geared down quickly and, with demand now increasing, the winners are those that are able to gear up production efficiently, as the year-end figures from Caterpillar reflect. With the cost of new equipment up by around 20% on prices in June 2009, the used market is still strong. In mid to late 2011, regardless of make, model and year, prices strengthened for late-used and nearly-new equipment, with the strongest rallying in the 12 to 24 month class.

In 2012, the current trend, which is predicted to continue, is that interest in older machines and equipment in the 24 to 48 month class are the next focus on the ‘wish list’ as market stocks deplete. But what has caused this market shift? Again, showing no sign of fear, Caterpillar will launch 64 new machines in 2012 and will spend $4billion on capital investment.

At Auction

Euro Auctions has repeatedly seen over 30% of all plant sold leaving the UK and Europe for projects in Australia, South Africa, South America, Central America and India. With the UK still looking for large construction or infrastructure projects to commence in the wake of the Olympics, or house building to change up a gear, the future for the used market is overseas. UK prices of good second-hand equipment held through Q1 and look set to hold in Q2.

In 2011, 12 to 24 month old equipment was reaching premium prices, closely followed by good 24 to 48 month old stock. This trend has continued in 2012 with world buyers now being more specific. High in demand is mining and extraction equipment with large dump trucks at the top of the list and anything with approaching 300 hours on the clock are seen as just ‘run in,’ so many owners are sitting tight as projects end, seeing values rise as demand increases.

Emerging markets are always the first to be seen at auction and India is a regular new participant, with an appetite for small to medium sized construction machines such as backhoes, dumpers, mixers, dozers and excavators.

Demand

European demand has been affected by strengthening Sterling, leaving the UK more expensive than the rest of Europe. In Q1 of 2012 Australia continued its huge demand for crushers, screeners, large dump trucks such as the Volvo a40e, CAT 740, Komatsu hm400 and large excavators in the 50 tonnes plus category.

With peace in North Africa continuing, wheel loaders, generators, backhoes dumpers and mixing plants are in demand and are being hotly contested. It was apparent that much equipment was being shipped through Africa bound for destinations such as India, South America and also Australia.