Buying Construction Equipment: New or Used?

What's a better investment, new or used equipment?

“One dollar bid... now two, now two... do I have three? Sold! To the asphalt guy in red!”

So, you've been in business for a while, you have the job costing thing figured out, you are making money. Things are looking good! Now comes the big question that generates great debate among contractors: What’s your fleet plan? 

At T & N Asphalt Services, we really care about image. But having a clean image doesn't mean you need brand new trucks or equipment. That being said, is there a benefit to buying new every so often? 

We generally buy used pickups, but only pickups new enough that they look sharp and fit in with recent model years’ body styles.  And the trucks we acquire are usually already in our current paint scheme (though sometimes we paint them to match).  We perform light body work such as color sanding and extensive interior detailing.  Next we go through the mechanics of the vehicle very closely ̶ I like to call it “aviation maintenance” as nothing goes uninspected.  The finished product is a strong used truck that looks sharp and will last us for years to come ̶ but we got it at a significant savings. 

As for equipment, we tend to keep our equipment longer than we do our trucks. But we take extremely good care of it, not only with preventative maintenance but with heavy maintenance as well (again, aviation-style inspections and repairs).

A good example is our crackseal pots, some of which are 20 years old and just recently fully rehabbed. But looking at them, you would never guess. If you had seen them before the start of the season, you might say they are brand new. That’s because we spent the time to strip the paint and repaint and sticker the entire unit. One unit also had an extensive engine rebuild, and both had hydraulic hoses preventively replaced and burners inspected or replaced. The finished product is like new and will last for a long while. 

There’s no question that we saved money over the cost of buying new, but there is also strategy in buying new equipment at set intervals, which we do. Over the years we’ve purchased equipment from brand new trucks to brand new seal tanks. They’ve all been worked hard and are still in service for us because of our maintenance program.

Undoubtedly the maintenance costs have been lower to nonexistent with equipment we bought new vs. used, but the purchase price has to be factored in. (Also keep in mind when buying equipment that you can potentially have a tax break as you expense that purchase.)

In addition to initial price and maintenance cost, two items have a big impact on whether to buy used or new: downtime and safety. Having a crew sit idle because a $20 hose bursts can hemorrhage profits like nothing else that can happen on a job, and nothing can prevent downtime from a burst hose better than regular maintenance.

And as far as safety is concerned, I have seen time and time again trailer wheels popping off when wheel bearings failed because they haven't ever been serviced.  This not only creates downtime but a huge potential liability nightmare. Just last year a local guy near us had a trailer come off and sway and roll over on a major interstate. It closed the road for hours and the accident – and company name – were all over the news. That’s just a position I wouldn’t wish on anybody. 

With the off season rapidly approaching, there’s generally not a better time to buy new equipment. The main focus is the 179 Tax exemption, which allows certain things to be purchased and expensed. Rules have changed recently- so always check with your tax professional, but should your purchase qualify, it may just help to facilitate spending your money a little smarter. 

The other reason the off season is a great time to buy is because of National Pavement Expo. NPE is the premier trade show for pavement maintenance professionals.  Attendance at this wildly popular event gets you a front row opportunity to see the latest and greatest pieces of equipment from a wide array of suppliers. You can literally kick the tires on your wish list – and heck, many vendors even offer extra deals if you want to take the unit right from the show.

We also use NPE to mingle with factory reps, and we can often get answers to technical questions that we may have about our current equipment. From rebuilding pumps, to making modifications, you can’t beat the opportunity to talk with the main people who know your equipment inside and out.