Let's assume that you are in the market for a used machine. In the same way that there are lots of lemons out there that will leave you with a mountain of headaches, so too are there loads of high quality used machines that still have tens of thousands of hours of productive use in them. Here is a guide to help you find a high quality used machine.
1) Quality of Maintenance
The real depreciation of heavy machinery is obviously not the same for all machines. The key variable is the way in which the machine has been maintained. When it has been well maintained, the depreciation is gradual and consistent. It is possible for an old machine that has been well maintained and has slightly more hours on the clock will be worth more than a newer machine that has not been well maintained and has fewer hours.
2) The versatility of the Equipment
Used equipment that can perform a variety of tasks (like a TLB), is flexible, and is equipped with better features is a better option for purchase considerations and will demand a higher price in the market.
3) The Manufacturer
Like cars, there is no single name that everyone loves and is loyal to. But there are certain names that consistently pop up as being the most reliable and they are obviously the well known and established names like (in order of global market share): Caterpillar, Komatsu, Hitachi, Volvo, Liebherr, XCMG, Doosan, Sany, John Deere, and JCB.
The reputation of the manufacturer also comes into play while determining the fair market value of the used heavy equipment. Used equipment from a reputable manufacturer is likely to be equipped with the latest features and offer higher flexibility, ensuring higher productivity and efficiency. Consequently, such machines would be priced at a higher rate than other ones in the market.
4) The Seller/Dealer
No one knows the machine better than the seller and/or the dealer and you, therefore, need to place a high degree of reliance on that. If the seller is unknown to you, Google him. People love to complain online if they have been ripped off and you may find some useful intelligence online about potential sellers. A professional dealer will verify the fact, along with evidence to support it, that proper maintenance of the used equipment has been carried out diligently. Reputed dealers also sometimes provide a minimum warranty on the used equipment.
5) Market Factors
The condition of the market also directly impacts the fair market value of used equipment. For instance, during a slow economy or recession, prices will decrease as there would be lesser demand for such machines. This is simply the forces of supply and demand that you learn in basic economics.
Other ways to reduce the risk of buying a lemon is making use of one of the following:
1) Professional Appraiser
You may get the job done by hiring an appraiser. An appraiser is a professionally trained and certified individual who has expert experience in this field. If the purchase of used equipment is for business purposes, then you must hire an appraiser who specializes in business valuations to get a market value that's as realistic as possible. This is a costly route to follow and many buyers balk at the cost but at times the cost of the appraiser may be justified.
2) Going Online
Do your research to assess what similar machines are selling for to ensure that you are not overpaying for the equipment? Gumtree is possibly the most widely used website for used heavy machinery. At the time of writing this post, there were 13,432 Ads in Medium & Heavy Commercials in South Africa.
Vikfin can also help you in sourcing high quality used equipment, so get in touch with us!
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