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Used equipment in demand: price rises sharply
Ritchie Bros. sells some 650,000 machines, trucks and other items annually worldwide, occupying a leading position in the market.

Used equipment in demand: price rises sharply

Ritchie Bros. shines light on changing construction machinery world

The demand for used equipment increased dramatically last year, while the supply decreased. As a result, prices for used construction equipment - including in the Netherlands - went up significantly. A development that will not turn around any time soon, Ritchie Bros. expects during an online event on "Movements in the Construction Machinery World.

The housing crisis is not only gripping the Netherlands; worldwide, as a result of far-reaching urbanization, digitalization and energy transition, the construction industry is facing major challenges. As a result, the industry as a whole appears to be little affected by the Covid-19 pandemic and is once again presenting itself as the engine of the economy. The other side of the coin is that there is enormous demand for equipment to do the job. Partly due to delayed deliveries in the first corona year, a record 1.13 million construction equipment units have been sold worldwide by 2021 (Off-Highway Research research).

From traditional auction house, Ritchie Bros. has transformed into a global marketplace for insights, services and sales opportunities.

The Netherlands is also experiencing a sales peak of about 8,000 machines, an increase of 40% compared to 2020 (5,690), according to the British research firm. This mainly involves earthmoving machines such as (mini) excavators, wheel loaders, telehandlers and bulldozers. AWPs, cranes, compaction machines (including vibratory plates and rollers) and demolition, recycling or foundation equipment are not included in the figures. Thus, the actual number is considerably higher and would be even higher if more machines had been in stock.

Average machine prices are skyrocketing due to the corona pandemic, especially those for wheel loaders and excavators on tires or tracks.

Rental growth continues

Because of problems on the production lines due to a scarcity of components, delivery times sometimes go up to a year and a half, and many users are looking for alternatives. A solution is found by renting machines. According to the European rental organization ERA, the industry realized 6.3% more turnover in 2021 and a further 5.6% growth is assumed for this year. In terms of numbers, as many machines are now sold in Europe to rental companies as to contractors (both accounting for 37% of the market), once again underlining the rise of the rental sector.

Higher use of construction equipment in 2021 caused scarcity at Ritchie Bros. auctions and online marketplace.

The used equipment market is also clearly feeling the effects of developments in the construction industry: demand for used machinery has skyrocketed. For example, Mascus, the largest used equipment advertising website in Europe, recorded no less than 60% more phone calls and 7% more e-mails from Dutch buyers last year. "A sign that buyers are really shy about machines and want to do business quickly," says Martin Koornneef, Regional Operational Manager Benelux & Nordics at Ritchie Bros.

Higher utilization

Three notable trends can be identified: increasing demand, decreasing supply (due to fewer new sales in 2020) and increasing prices. From a European perspective, the number of machines sold by Ritchie Bros. remains fairly stable over the last three years at nearly 70,000 machines, noting that fewer heavy construction machines went on sale (-17% vs. 2020). This also applies to the Moerdijk auction site, where some 16,500 machines changed hands last year and the share of heavy equipment shrank by almost a third to 2,100 units. Especially the number of excavators (also mini and midi-excavators) declined sharply.

Koornneef explains that decline by a shortage of used equipment and high utilization. Especially among companies in the rental sector, which regularly work with Ritchie Bros. when selling equipment. At the same time, demand is skyrocketing, as evidenced by the average number of bids (+17%) and bidders (+28% in Europe and +33% in Moerdijk) per machine sold. Since the beginning of the pandemic, there has been an increase in sales prices, but as of March 2021, prices are going up solidly. Furthermore, the extensive database shows that machinery is aging. The average age of machines going on sale crept up and even caused young equipment to sometimes sell for new prices at Ritchie Bros. auctions and online marketplace.

Transformation

In recent years, Ritchie Bros. has undergone a transformation from traditional auction company to global marketplace for insights, services and sales opportunities. In addition to live and online auctions at Ritchie Bros. Auctioneers include Mascus (popular advertising website), Marketplace-E (an online marketplace) to buy and sell. In addition, through subsidiaries, Ritchie Bros. helps equipment owners manage their fleets through Rouse Services (market intelligence for construction equipment), SmartEquip (smart parts software) and RB Asset Solutions (fleet management). 

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