Market update from Raffi Aharonian, Managing Director of Rouse Appraisals
Earlier this month, we published an article on used equipment pricing trends and how now is the perfect time to sell to maximize returns. But how will equipment buyers and collateral lenders know when the market is going to change?
While there is certainly a lot of reasons to be encouraged about used equipment pricing today, we always need to be carefully monitoring the market as used equipment prices are cyclical. Here are a few key indicators to keep an eye on in the weeks and months ahead:
Key Supply Indicators
While headlines have been overtaken with talk of supply constraints, there are a few avenues customers can pursue to get a better understanding of the intricacies of equipment supply & demand.
On the new equipment side, publicly-reporting OEMs have been providing a lot of guidance into production levels and backlogs. As more supply begins to come online, no doubt OEMs will be broadcasting this in an effort to get new gear into customer fleets.
On the used equipment side, Rouse Services keeps track of unit volumes coming out of fleets. We have seen reductions in the volume of equipment going to auctions and will be on the front line of visibility as volumes begin to tick up. Be sure to check in with your local sales representatives to get timely insights on supply of used equipment.
Key Demand Indicators
In terms of demand, customers should research publicly available data around infrastructure spending, construction activity, and key indices such as the Architectural Billings Index (ABI) to get a feel for how demand is trending.
Earlier this week, our friend Chris Sleight from Off-Highway Research, put out this great report about record sales in 2021 and what we can maybe expect in 2022.
Likewise, for an alternate real-time view, equipment stakeholders within the rental industry can get a feel for demand by way of utilization, a key indicator of end-user demand for equipment. Rouse Analytics provides accurate, daily tracking of utilization metrics across the US and Canada markets, by product and geographic market (and soon to be available in the UK market).
From a pricing perspective, the best and most up-to-date source will be to keep a close watch on the Rouse Retail Value Index (see above), as well as all the Ritchie Bros. indexes included in our monthly Market Trends Report.
While we have seen a continued upward trend in the recent 18 months, any deceleration in this trend–- combined with the supply and demand factors noted above—can help provide a view to a shifting market.
Regardless of the direction of the market, it’s critical for customers and collateral lenders to keep a close watch on the trends as they are developing to prepare themselves, their internal credit committees, and borrowers, for any changes that may come.
Keep reading the Ritchie Bros. blog for the latest in pricing, demand, and supply trends.
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