Used Forklift Pricing: On the Rise?
While talking to MHEDA members for our annual industry forecast, I heard from several people how sales of used and rental equipment, forklifts in particular, will be tools to lead the material handling industry out of the recession. The reasoning is, many end-users can’t afford a large expenditure on new material handling equipment, but may be able to afford the cost of used equipment or the small monthly outlay for a rental unit. This is a good way for dealers to maintain their cash flow now and retain a customer who may buy new equipment once the market rebounds.
It’s sound logic. That’s why it was interesting to talk to one distributor member, a forklift dealer (I’m going to keep the name out of this because they didn’t realize they would be quoted in this platform), this week who shed some more light on the used material handling equipment industry. One of the more interesting insights this person gave was that prices on used equipment will be rising because of the dearth of new equipment being sold. Before long, this distributor says, the cost savings won’t be all that much. With no new equipment that will become used equipment in a few years, the supply of used equipment will be small, and prices will need to rise.
Another point on that topic came up in a discussion with a colleague subsequent to that call. What new equipment was sold over the last few years will have less wear-and-tear on it than same-aged used equipment from a few years ago, because end-users aren’t as busy. Trucks may be running fewer shifts than normal. This will also affect used equipment pricing because the used equipment that is being resold will be in better condition than a used truck has been traditionally.
It’s an interesting trend to follow over the next 18-24 months. I’d love to hear your thoughts on this issue.
Tags: forklift, material handling, used equipment
February 4th, 2010 at 12:08 pm
I believe the opposite will happen regarding the pricing of used equipment. The banks now have inventory they wish they didn’t have due to repos and the factories are selling new units at such low prices that the gap between the new unit and the “used” unit is shrinking. Interest rates remain low so the monthly payment for new versus used doesn’t so a big enough difference especially when you compare 36 months (used) -vs- 60/72 months (new). Used trucks are going down in price especially if the unit is 7 years or older.
February 4th, 2010 at 3:44 pm
Interesting point, Tom. That’s what I originally would have thought, which is why I thought my source’s outlook was so intriguing. Either way, the used market will be a good place to keep an eye on for the short-term future.