Forecasting the Impact of Tier 4 on the Used Construction Equipment Market
This blog post is the result of IEDA’s recent member survey
According to a recent survey of Independent Equipment Dealers Association (IEDA) members, the EPA’s Tier 4 mandates are driving up the demand of non-Tier 4, used construction equipment and predicts this trend will continue for the next 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 percent. Also, more than 50 percent of survey respondents noted that quality used equipment is getting harder to find.
The IEDA membership base is comprised of equipment dealers from around the world specializing in used construction and mining equipment sales. Since the EPA implemented new standards more than two decades ago, the IEDA’s 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, TX. “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.”
In this most recent survey, most members are still unsure how Tier 4 machines will hold their value when these models hit the used equipment market. Of the members surveyed, 37 percent 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 the use of 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 these 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.