As a whole, construction equipment final hammer prices were 0.9% higher in February 2021 than they were in February 2020, despite average meter reads being up 6.0%. Of the 75 types of equipment analyzed by EquipmentWatch, 53 experienced a year-over-year increase in average auction pricing. Activity on the channel was 24.4% lower in February 2021 compared to February 2020.
The value of a piece of construction equipment varies due to many factors, from the season to the activity of the various segments of the construction market. The Fair-Market Value (FMV) is the value of an asset sold to a single buyer under no compulsion (shown in the tables as the Resale Value). Forced Liquidation Value (FLV) is the value of an asset sold at a properly advertised and conducted auction in which the seller is under compulsion to sell on an as-is, where-is basis as of a specific date (shown in the tables as the Auction Values).
Both FMV and FLV were down in February 2021 compared to February 2019. FMV was only down slightly year-over-year (down 1.2%) and month-over-month (down 0.9%). FLV was also down slightly month-over-month (down 0.8%) but was up slightly (0.4%) compared to February 2020.
Auction’s month-over-month activity increase is dramatic due to the seasonality related to the channel, with fewer auctions occurring in January and typically some of the highest activity for the year occurring in February. Focusing instead on the year-over-year comparisons for auction activity, we see that activity was down 24.4% compared to February 2020 and 11.4% compared to February 2019.
While not all equipment auctions are limiting to online bidding only, one of the largest February auctions from Ritchie Brothers was still solely online, which could be part of the reason for the year-over-year decline in activity. However, as we reported in the January 2021 edition of this report, auction activity for construction equipment was actually up 3.0% in 2020 compared to 2019, so attributing the full decline in activity to the switch to online may be overstated. It is possible, however, with more auctions being online, bidders may not feel the pressure to confine their purchases to just February and, of course, with the coronavirus pandemic still going on, some consigners may have had reservations about putting items up for auction this February. There are also headwinds still being felt in the non-residential construction segments in terms of project delays and cancelations, as recently reported by the AGC which could be dampening activity.
On the resale channel we also observed a month-over-month increase in activity (up 9.9%), while seeing activity decrease compared to February 2019 (down 8.0%) and February 2020 (down 12.7%). As on the auction channel, the declines in activity may be attributable to uncertainty surrounding some projects being delayed or canceled. This is likely more prevalent among non-residential construction.
In terms of equipment age, on the auction channel we can see that on average the equipment sold in February 2021 was 1.9% older than in February 2020 and 5.5% older than in February 2019. On the resale channel, average age for listings were down compared to the previous month, the previous year, and two years ago.
On the auction channel, average utilization was flat compared to two years ago (down 0.5%) but up year-over-year (up 6.0%) and month-over-month (up 20.5%). Utilization was up on the resale channel as well, including an increase of 10.7% compared to two years ago.
Focusing on Crawler Mounted Hydraulic Excavators, we wanted to look at their average values over the past two years. The value trend lines for Crawler Mounted Hydraulic Excavators show that this type of equipment has fared better than what we have seen for construction equipment writ large. This makes sense given the wide range of applications these excavators have, buffering their values from the inconsistencies we have seen with construction project recovery. In relation to auction final hammer prices, values for Crawler Mounted Hydraulic Excavators have increased since February 2020, with FLV up 11.8% and FMV up 2.8%.
Soil Compactor Trends
Another equipment segment we have analyzed this month is soil compactors—see the table for the specific types of compactors included.
As can be seen below, both FMV (Resale) and FLV (Auction) prices took a jump up in May 2020 and another smaller bump up in December. FMV average price in February 2021 versus February 2020 is up about $9,000 (about 19%) and average FLV is up $3,500 (about 14%).
This article is brought to you through a collaboration between EquipmentWatch and World of Concrete 360. The EquipmentWatch Market Report is a monthly resource for the construction, lift/access, and agriculture industries to help equipment managers make better-informed decisions by leveraging key equipment values, market activity, age, and usage metrics. For more information about EquipmentWatch’s methodology and data, and to learn more about what it has to offer contractors, click here.