“How do I know if it’s the right time to sell my used equipment?” This is a question every heavy machinery owner has to ask themselves, whether they simply want to sell or are looking to sell-and-replace. Conducting life-cycle cost analyses and developing inventory replacement strategies are essential activities for construction, agriculture, and all equipment industries. When you do sell, we hope you’ll list your equipment for sale on Equipment Trader’s nationwide marketplace – but first you need to know if the timing is right!
Here are 13 signs that it’s time to sell your used heavy equipment:
1. Breakdowns & Repairs Are Going Up
Review past preventative maintenance and repair patterns, then project future costs. Repairs are likely to go up over time, and unplanned down-time can cause you to lose contract jobs or result in crop losses. If your machinery’s costs are projected to exceed productivity profits, or if you’ve had four unplanned repair events in a single year, it’s time to sell.
2. The Equipment Has Entered Old Age
As equipment ages, it depreciates in value and – at some point – repair costs will exceed the value of the equipment. Every type of equipment is different, but generally this happens between 7 and 10 years of age. Selling your machinery before it’s too old helps you stay ahead of this financial pitfall. Luckily, total costs rise gradually, so you have flexibility to figure the timing out.
3. The Engine Has Been Run A Lot
Workers use equipment for various jobs and different amounts of time. A better predictor of when to sell may be the machinery’s engine hours. To sell while repair costs are still modest, you likely want to sell before the engine hits 10,000 – 12,000 hours. If you start having to frequently replace pistons and injectors, that’s also a sign the engine may be past its prime.
4. The Machinery Guzzles Gas
Older equipment can use a lot of fuel, and may even need its engine retrofitted to meet current emission regulations. Selling a gas-guzzling machine and replacing it with a new fuel-efficient model can save you a lot of money in fuel costs each year.
5. “Soft Costs” Are Going Up
Heavily-used equipment might be adding hidden costs to your business. A worn and uncomfortable cab can decrease operator performance and productivity. Scratched and dented equipment doesn’t look good to the public and could hurt your brand. Cosmetic issues can be refurbished, but that also costs money. If there are a lot of these fixes, maybe it’s time to sell and start fresh.
6. Your Needs Aren’t Being Met
It’s important to ask if your equipment is meeting your business’s needs. Does it have the weight capacity or vertical reach you need? Can it still till a field as quickly as it should? Or, have your needs changed as you’ve expanded or downsized projects? If the answers to such questions show the machinery isn’t meeting your needs, you may want to sell and transition to different equipment.
7. The Equipment Isn’t Being Used
If you haven’t used a piece of equipment in a long time, aren’t currently using it, and/or don’t have any upcoming work that would require the machinery, it could be a sign to let it go. Consider the costs to maintain, insure, and store idle equipment when making your selling decision.
8. The Machinery Still Has Resale Value
Don’t keep equipment until it’s entirely depreciated, inoperable, and only good for scrap parts. You might think you’re making the most of a purchase, but getting the full value of machinery includes making money off of its resale. Sell while you can still get something for the equipment.
9. The Equipment is in High Demand
Resale values shift based on the demand for equipment in the market. When your machinery is in high demand, you can sell it at a higher price-tag. Keep tabs on consumer interest and remember that different regions and industries heat up at different times. Selling on a nationwide marketplace like Equipment Trader lets you tap into multiple markets at once.
10. It’s a Rare Type of Machinery
If your equipment is a complex model, you can’t risk unplanned breakdowns, since it’s difficult to quickly replace or repair rare machinery. Those with unique equipment often cycle through units more regularly than those with standard machines. If you have rare equipment, ask yourself if the risk of machinery downtime is worth buying new equipment and selling the used one.
11. High Turnover Works for Your Business
Some small contractors also cycle through equipment with high frequency, buying used machinery as needs emerge, making money by putting it to work, then selling it close to the price they paid. It’s a high-risk, high-reward strategy that can minimize the chance of breakdowns and repairs, but requires your business to have financial security.
12. Other Costs Need to be Offset
Managing a business is tough, and hard times can hit anyone. If things get tight and you need to offset other costs, one solution may be to sell your current vehicle and downsize to a cheaper unit. Or, in some cases, you may want to simply sell and take on fewer jobs.
13. The Equipment Has Become Obsolete
Older machinery might still run well enough, but its performance pales in comparison to newer equipment that gets the job done faster, more safely, and more efficiently. If a newer machine would make a big difference in your profits, go ahead and sell the used unit and get the new one.
Conclusion: If it’s the right time for you to sell your used machinery, we hope you list your for-sale heavy equipment on Equipment Trader’s nationwide online marketplace. From now until the end of the year, you can get 25% off your for-sale listing when you enter promo code SELL25. And for more seasonal information, check out our Spring Tips resource page!