As earthmoving equipment approaches the end of its productive life, maintenance costs start to accelerate exponentially. Final drives need to be replaced, engines need to be overhauled and the downtime on your machine directly impacts your business, especially if you are in the plant hire game. Many of our clients are faced with the question: if I choose to replace the machine, should I opt for a new or used machine. In this blog, I want to explore the advantages and disadvantages of new and used earthmoving equipment.
Advantages of Buying New Equipment
It is difficult to top the feeling of taking delivery of a new machine. Beyond the emotion and the new machine smell, for the first couple of years your maintenance and repair costs are going to be negligible. Warranties will also protect you from product defects. You are getting the most up-to-date technology and you get exactly what you want.
Disadvantages of Buying New Equipment
New equipment is expensive, especially when you are operating in an emerging economy with a weak domestic currency because the equipment is denominated in US dollars. This higher cost directly impacts your return on investment. Then there is the depreciation – in the same way, that a new car loses 20% of its value the moment you drive it off the showroom floor, so too does heavy equipment. Finally, there is the challenge of availability. COVID has disrupted global supply chains. This means that the time-lapse between ordering and receiving your brand-new excavator could be months!
Advantages of Buying Used Equipment
The obvious plus is the reduced upfront cost. If you acquire a high-quality used machine, the revenue generated from the machine will not vary greatly from a new machine, but the lower cost greatly improved the return on investment. You may even be able to buy multiple used machines for the same price as a single piece of new equipment, which means you can expand your fleet faster and get more work done. There is no escaping depreciation, but if you buy a used machine, someone else has suffered the expensive initial hit. Whether you're looking for a small skid steer or a large excavator, your used heavy equipment won’t depreciate at anywhere near the rate as new, especially if you take care of it. Because used equipment doesn't depreciate as quickly as new equipment, it holds its value, especially if you keep up on regular maintenance.
Then there is the issue of selection. There is more used equipment available than new. If you shop the used machine market, you’ll have an excellent chance of finding what you need. You’ll also be able to get your equipment when you need it and not have to wait months for your machine to be built. Flexibility can mean the difference of quickly putting a used machine to work rather than sitting idle, waiting for the inflexible luxury of new.
Finally, insurance costs are lower. New equipment insurance will assess replacement cost at a new machine value, even if it’s experiencing normal depreciation. You’ll likely overpay for insurance premiums with a new machine while a used model will have its premium adjusted.
Disadvantages of Buying Used Equipment
Firstly, the machine could be stolen. Secondly, it could be a lemon and will give you endless problems, and finally, if there are no reliable maintenance records, it could be unsafe.
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