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September 6, 2018

Residual values in heavy assets up 20%, auctioneer finds

Construction and agricultural machinery that’s between two and five years old and in top condition was trading at a premium at a used equipment auction organised by Euro Auctions in August.

By Brian Cantwell

Construction and agricultural machinery that’s between two and five years old and in top condition was trading at a premium at a used equipment auction organised by Euro Auctions in August.

“Shrewd buyers are increasingly looking to acquire low hours machines that have all the functionality and ‘bells-and-whistles’ they need but at a significantly reduced cost of a new machine,” said Jonnie Keys, Euro Auctions’ operations manager.

Residual values

“This means they gain all the operational benefits of an ‘almost new’ model but at a much-reduced cost. If they run the machine for a few years, and then sell it on through an auction, they minimise their exposure to depreciation and potential servicing costs,” said Keys.

“At the last sale, we saw some popular models go for a premium of as much as 20%; reflecting the desirability of these machines and what operators are prepared to pay for hassle-free operation.”

Euro Auctions gave an example of an excavating digger CAT 308E; the list price of a new machine, depending where in the world it is being bought and its exact specification, is around £100,000.

However, a machine that’s two to three years old and with about 1000 hours on the clock can often be secured for around £70,000.  If this is then well maintained and excessive hours are not added, it could realise after three to four years of productive service a sale price of around £50,000.

That means the excavator could cost £5,000 a year to own and doesn’t tie up a huge chunk of operating capital.

“In today’s economic climate when margins are being squeezed, value for money is vital, so bidders are increasingly prepared to pay a premium to secure a quality machine that meets all their operational requirements but has lower lifetime operating costs and therefore represents better overall value for money,” continued Jonnie Keys. “That’s why we are seeing two to five‑year-old machines commanding a real premium.”

Residual values: results from the August auction in Leeds

A total of almost 4,200 lots went under the hammer at the Euro Auctions three-day sale in Leeds at the end of August.

Over 2,000 UK and international bidders registering interest for this sale; one in ten of whom were first-time bidders.

The final hammer total was also over £33m, with around half of all tractions being completed online. Bidders were attracted from right across Europe, North Africa and the Middle East with additional interest being shown by bidders in North and South America, Asia and Australia.

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