By Jordanne Waldschmidt – Equipment World
New construction equipment sales have softened as higher interest rates, paired with economic uncertainty, have started to take a toll on contractors.
“They’ve got work, but they’re being a little bit more cautious with the spend that they have and trying to utilize the fleet the best they can with the jobs in front of them,” Chris Deininger, Central and East region manager for Wells Fargo’s Commercial Banking Heavy Equipment Dealer Group, told Equipment World.
Just as historically low interest rates during the pandemic pushed contractors toward new equipment purchases, the higher interest rates following it, combined with the increased price of new equipment due to inflationary pressures, are causing contractors to look again at rental as a way to manage costs. If contractors become less confident in the backlog of jobs, they will likely shift away from buying in favor of renting.
“A lot of dealer clients that had historically been purchasing a new unit every other year are now renting or holding onto units a little bit longer during the last 24 months. Contractors are wanting to hold on to that cash,” Deininger says.