TRENDLINES
CHARLES YENGST
www.yengstassociates.com — cyengst@yengstassociates.com
The Pre-Owned Equipment
Market Gains Momentum
CHARLES R. YENGST IS
PRESIDENT OF
YENGST ASSOCIATES,
WILTON, CONN.
Used equipment — perhaps we should call it “pre-owned” equip- ment — is not talked about very
much since statistics and lack of equipment registrations in the marketplace
make it difficult at best to gain any sense
of what is happening. Sales of used machines can take several different channels — auctions, sales by equipment
dealers and of course, direct sales from
one owner to another.
While I can’t prove the numbers, I
estimate the North American market for
used machines in the range of $50 billion based on 2011 industry results. This
is my estimate and I could be off either
direction by $10 billion. But I can say
that the used equipment market moves
generally along with the new equipment
market, leading in a rising market and
lagging when things are heading south.
For lack of the usual sources for good
information to pinpoint used equipment
results, I follow the happenings at Ritchie
Bros. Auctioneers (RB). With roughly
75% of its business in North America,
Ritchie Bros. puts out a lot of data regard-ing its auction results — quarterly, annually and even by types of machines sold,
etc., if you want to dig.
In 2011, RB had gross proceeds of
$3.7 billion from its worldwide auction
activity, which was 13% above its 2010
results. The company had a moderate
dip in its business in 2010 for the first
time in many years, but that followed
one of the most difficult years in the
equipment industry. Higher demand for
late-model equipment in 2011 is a good
sign and it’s growing even today. Prices
are also getting better compared with
2010 and 2011, also a very important
factor in the used machinery business.
On a different subject, no sooner had
I finished last month’s discussion about
alliances in the machinery industry than
I learned of yet another interesting affair
between two well-known companies.
Caterpillar (once more) and Kubota quietly reached an agreement whereby Kubota will produce three models of its diesel
engine line for Caterpillar under a private-label agreement that gets moving this
month. This is a big switch for Caterpillar
in that it has been using Perkins diesel
engines for years in its Building Construction Products (BCP) Group, and
now it is phasing Kubota engines into its
upgraded machines. It will mark the first
time Caterpillar and Kubota have worked
together through a supply agreement.
Caterpillar is looking to ramp up its
power ratings on the BCP machines and
this was one way to do it, notwithstanding
major engineering changes in the Perkins line of diesel engines. The Kubota
engines are already certified and meet
Tier 4 interim specifications, and the engines fit into Cat’s machine platforms for
the various products involved. Furthermore, Kubota has the ability to produce
these engines in large volumes, a criteria
Caterpillar absolutely requires to meet its
market numbers for product sales on a
global scale.
All engines will be manufactured in Japan by Kubota and shipped to Caterpillar
plants where the products are being produced. Chalk up one more alliance that
didn’t exist before and one that surprises
many people in the industry given Caterpillar’s ownership of Perkins.
I might add that if other Caterpillar
products are brought into the marketplace
with engines rated near 100 hp or lower
or reach a stage of updating in the next
year or so where the Kubota engines
meet needed power ratings, there might
be more changes taking place. dp
