According to a recent survey of Independent Equipment Dealers Association (IEDA) members, the EPA’s Tier 4 mandates are driving up demand for non-Tier-4 used construction equipment and predicts the trend will continue for several years.
For many equipment categories, used equipment availability is outpacing demand, but for other categories, including excavators, backhoe loaders, wheel loaders, dump trucks, dozers, and compact equipment, IEDA members are seeing resale pricing increase by as much as 20%. Also, more than 50% of survey respondents noted that high-quality used equipment is getting harder to find.
The IEDA membership comprises equipment dealers from around the world specializing in used construction and mining equipment. Since the EPA set new standards more than two decades ago, IEDA staff and members have kept a close eye to how used equipment availability and pricing would be affected by each new standard.
“Our members buy and sell used equipment globally, which makes them well aware of market trends,” says Drew Van Brunt, IEDA president and Owner of Global Tractor Company in Colleyville, Texas. “As a group, we make it a point to share trends we see in the market with each other, as well as with used equipment buyers and sellers. The current used equipment market is strong, but it will be affected by Tier 4 machines in the near future.”
The most recent survey shows that most members are still unsure how well Tier 4 machines will hold their value when they hit the used-equipment market.
Of the members surveyed, 37% believe Tier 4 machines will not retain their value as well as non-Tier-4 equipment, but many others believe Tier 4 machines will have better resale value because many projects demand Tier 4 compliant equipment. If more construction projects demand the use of Tier 4 machines, the residual value of non-tier-4 machines will drop significantly.
Currently, there are only a few Tier 4 machines in the used equipment market. IEDA members predict that the market is 4-8 years away from being dominated by the newer machines. At that point, non-tier-4 machines will be harder to come by, and pricing on Tier 4 machines will become more steady.