The used equipment market remains vibrant and resilient to economic slowdown

Contrary to the global slowdown in sales of new equipment, the used equipment market remains vibrant with the emergence of multichannel trading platforms that enable sellers to discover new markets. PMV Middle East talks to Ritchie Bros. and Euro Auctions to find out what buyers want and what’s trending and selling at their Dubai auctions.

Used equipment, Auctions, Ritchie Bros., Euro Auctions, Asset management, Asset disposition, Dubai
Used equipment, Auctions, Ritchie Bros., Euro Auctions, Asset management, Asset disposition, Dubai

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Heavy equipment manufacturers continue to face a decline in sales of new equipment due to the impacts of sluggish global growth. According to the International Monetary Fund’s World Economic Outlook report in July 2019, the slowdown in global manufacturing activity, which began in early 2018, has continued, reflecting weak business spending on machinery and equipment and consumer purchases of durable goods such as cars.

The economic slowdown in China and India and the US-China trade war has reduced demand for new equipment in both the markets. The ramifications of weakening activity in these large economies extend to other markets in Southeast Asia; for example, a decline in coal exports to China and India has affected the mining industry in Indonesia, which has reduced the country’s demand for mining trucks. However, this trend does not reflect the state of the global mining industry. There’s sustained demand for heavy equipment in Australia, New Zealand and certain parts of Africa, where the mining industries remain robust.

One of the reasons why the used equipment market shouldn’t be seen from the perspective of macroeconomic factors alone is that irrespective of an upswing or slowdown in global economies, the used equipment market is likely to remain resilient provided the growing inventory of machines that needs to be disposed is visible to interested buyers worldwide. While the slowdown in China, India, and the Middle East has increased the supply of used equipment in these markets, it is being matched by growing demand from markets in Africa, South America, and other parts of the world.


Karl Werner, president, international, Ritchie Bros., explains: “Generally, a slowdown affects sales of new machines and increases demand for used machines. Ongoing utility and infrastructure projects in the world will need a steady supply of heavy equipment, and during economic uncertainty, customers will opt for used machines that they can employ for short-term projects and then sell them back via our auctions and expect to get close to their purchase prices. The global used equipment market is stable because it shows little variation between periods of economic boom and slowdown.”


Karl Werner, president, international, Ritchie Bros.

Demand for quality new and used construction equipment across the Middle East is starting to see slow resurgence, following the global economic downturn in the late 2000s, according to Euro Auctions. During the last 12 months, there has been a significant shift in the commercial buying processes with large equipment users becoming more financially aware of the ownership, operational cost and disposal values of their inventory.

Derek Bleakley, general manager, Euro Auctions, says: “Auctions are the real barometer as to who is buying, who is selling, what is trending and what the ‘must have’ brands are across the region. It is evident that buyers are streaming back to the market, and in general, used equipment prices in the Middle East have remained relatively stable over the past year.”


Derek Bleakley, general manager, Euro Auctions.

The majority of used equipment sold by Ritchie Bros. at its Dubai auctions are absorbed within the Middle East, mainly in the UAE and Saudi Arabia. A large number of equipment is also exported to Africa. Recently, Southeast Asia and Eastern Europe have emerged as prominent buyers from this region.

“The majority of buyers at the Dubai auction are dealers and brokers who export the machines to Africa. During the last two years, we’ve seen a decline in import of equipment from China to the Middle East, although Africa remains the biggest importer of used equipment from China. Buyers from the Middle East are finding good deals in Southeast Asia and Europe. French speaking markets in Africa tend to buy a lot of equipment from France, and our auctions in Moerdijk, Netherlands, attract buyers from the Middle East, regularly,” says Werner.

As the visibility of used equipment worldwide improves, asset disposition becomes less dependent on geographical boundaries. This trend is reflected at used equipment auctions that have created multichannel bidding and buying channels, giving customers the flexibility to plan, bid and purchase equipment in any market and from any location in the world. Consequently, an onsite auction in Dubai or Moerdijk is no longer limited to bidders and buyers from the Middle East or Europe, alone. 


Ritchie Bros.’ Dubai auctions also attract buyers from as far as South America and Australia who may choose to travel to Dubai or designate a local representative to inspect equipment at the auction, or in some cases, rely only on online information to close a deal. The ease of trading is facilitated by the three main buying and selling channels offered by Ritchie Bros. - live onsite unreserved auctions combined with online bidding; IronPlanet: an online auction held monthly; and Marketplace-E: an online marketplace offering multiple price and timing options. For example, 10 mining trucks worth $14.5 million from India were purchased by a buyer from Brazil through Ritchie Bros.; the bidding and buying process occurred online, entirely, without the need for equipment to be displayed or inspected at an onsite auction.

Top 10 assets in terms of value of lots purchased at the Ritchie Bros. Dubai auctions (2014–19 YTD)

Hydraulic excavators
Wheel loaders
Crawler tractors
Articulated dump trucks
Rock trucks
Motor graders
Hydraulic truck cranes
Rough terrain cranes
All-terrain cranes
Vibratory rollers

Prior to an auction, Ritchie Bros. tracks buyer demand by monitoring its web activity, particularly keyword searches, in the month leading up to the auction. Data analytics enables the company to identify and target buyers based on their search activity, geography, preferences as well as intent to buy.

“Every month we get an average 5 million unique visitors on our websites and track the search and browsing patterns and locations. This helps us make decisions about where to move items around to maximise returns. For example, if we find that searches for generators are high from Australia or Europe, we’ll transport more generators to those markets. Such data is valuable not only for us to optimise our business internally but also for our customers to be more informed to sell their equipment in the best way possible,” says Werner.

Top 5 bidding and buying countries in terms of value of lots purchased at the Ritchie Bros. Dubai auctions during 2018-19

September 2019 (No. of bidding countries: 79; No. of buying countries: 42)

Middle East bidders Middle East buyers International bidders International buyers
UAE UAE USA Madagascar
Saudi Arabia Saudi Arabia Canada Netherlands
Jordan Kuwait Netherlands India
Oman Yemen India Nigeria
Egypt Jordan UK Canada

June 2019 (No. of bidding countries: 76; No. of buying countries: 42)

Middle East bidders Middle East buyers International bidders International buyers
UAE UAE USA USA
Saudi Arabia Saudi Arabia Canada India
Oman Oman India Nigeria
Jordan Iraq Netherlands Trinidad & Tobago
Lebanon Yemen UK Australia

March 2019 (No. of bidding countries: 86; No. of buying countries: 49)

Middle East bidders Middle East buyers International bidders International buyers
UAE UAE USA Netherlands
Saudi Arabia Saudi Arabia Canada USA
Oman Kuwait Netherlands Nigeria
Egypt Jordan India India
Jordan Iraq UK Singapore

2018 annual results (No. of bidding countries: 105; No. of buying countries: 68)

Middle East bidders Middle East buyers International bidders International buyers
UAE UAE USA Netherlands
Saudi Arabia Saudi Arabia Canada China
Jordan Kuwait Netherlands USA
Egypt Egypt India Rwanda
Oman Oman UK Nigeria


Online bidding and online buying at Euro Auctions Dubai have increased year on year by approximately 11% per annum. The total number of vendors registered over the last 12 months has increased by 20%, over a 10% uplift in 2018. New bidder accounts over the last two years have increased by over 65% year on year. Furthermore, first time registrations with Euro Auctions has increased, by 75% in 2017–18 and by 99% in 2018–19.

“The Euro Auctions October 2019 sale in Dubai showed that while the number of lots at each sale fluctuate and the final hammer price moves up, the interesting trends come from who is buying and how they are buying. Buyers still like to attend the sale or the inspection days; however, an increase in online activity is evident on our bidding platforms,” says Bleakley.

“The top two buying countries either online or visiting the auction to bid are predictable. As for the rest, now that is interesting, proving again that used plant and machinery are truly global commodities and the world is getting smaller,” he adds.

Top 10 buying countries at the Euro Auctions september 2019 Auctions in Dubai

UAE
African countries
Netherlands
Saudi Arabia
India
Germany
Iraq
Jordan
Lebanon
UK

Top 10 equipment and brands sold at the Euro Auctions sales events in Dubai to date

Equipment Brands
Telehandlers Caterpillar
Excavators (over 20 tons) Komatsu
Dozers Volvo
Backhoe loaders JCB
Forklifts Case
Aerial work platforms Hitachi
Generators Mercedes-Benz
Articulated dump trucks MAN
Tipper trucks / prime movers Kawasaki
Compressors JLG

In general, all types of equipment, particularly if it is well maintained and in good condition will attract buyers and there isn’t any one type of machine that has gone out of favour, according to Bleakley. In some instances, prices at the Dubai auctions are lower than those commanded in parts of Europe and the Far East, which attracts new buyers looking to acquire equipment for export.

“We always find buyers waiting to invest in large equipment such as telehandlers, dozers, excavators, cranes, access equipment, as well as smaller equipment such as mini-diggers, generators and compressors. The models sold in this region tend to be focused more towards functionality rather than incorporating additional gadgets, making them easier to maintain. What cannot be repurposed within the region or command a premium in Europe or the Far East will typically be shipped to Africa where there is an ever increasing demand for low-cost, functional equipment and where their age or condition is often irrelevant,” he says.


In the past, new equipment was typically purchased for a project and then disposed of upon completion. This approach has shifted somewhat as many of the big local construction operations and the leasing companies that support them seek to extract more value out of their projects. In some instances, nearly new, well maintained, 'low-hours' equipment in all shapes and guises, will return to the market within a couple of years of purchase as they command premium prices and are in high demand. 

Some construction operations are also opting to hold onto equipment for between four and eight years, choosing instead to invest in comprehensive maintenance. When these lots come onto the market, they are still in high demand because despite their age, they have full service histories and still have several productive years ahead of them. Prospective buyers of such equipment tend to be Tier-2 operations looking for quality equipment to take on smaller building schemes and ongoing maintenance contracts.

“While the market is adjusting with the high level of equipment exports over the past number of years, a gap in the market for quality used and unused equipment is opening up which is predominantly driven by the equipment rental market as large construction companies seeking to step away from the traditional owner operated model to reduce the upfront investment,” says Bleakley.


Euro Auctions continues to develop its global brand with a presence on four continents – Asia, Australia/Oceania, Europe, and North America. The company hosts four auctions per year in Dubai.

“When, in 2017, Euro Auctions leased the 90,000-m2 site in the Jebel Ali Free Zone that was previously occupied by World Wide Auctions, we were judged to be part of that same company, who had a poor business reputation. Since then the confidence in Euro Auctions has increased year on year backed by our global reputation and standards. We are now the trusted disposal partner for several prominent construction, oil field service and humanitarian organisations in the region.  With another 100 new first time registered bidders at our September auction, the growth in auction participation has far exceeded our expectations.

We have the buyers, and our style of business, with no hidden extras, in relation to buyers and seller charges and simple commission rates has been described as refreshing,” says Bleakley.


Ritchie Bros. has been operating in the Middle East with its office based in Jebel Ali Free Zone for over 20 years. Having conducted over 80 auctions in all these years, the company recently extended its lease agreement for the next 20 years.

“We will be renovating and upgrading our office space and yard to provide our customers with an even better auction experience. Next year, we expect dealers to have larger inventories of equipment, and we are working on finding the markets that will have the highest demand for their surplus equipment,” says Werner.


With the projected increase in inventory and future economic challenges, it’s more important than ever to make the bidding and buying processes easier for customers, according to Werner. In this regard, Ritchie Bros. recently introduced new features such as PriorityBid for buyers and eReserve for sellers.

“The eReserve component added to online auctions has been gaining popularity with sellers. We found a niche market by introducing reserved bids to our monthly online auctions. We encourage sellers to set reserves at or close to market prices. Buyers will be able to transact only if their bids match the reserve prices,” says Werner.

The PriorityBid feature enables buyers to make proxy bids online for items in its live auctions up to a week before the sale. The PriorityBids put buyers first in line to win the item, provided no one outbids them. The system works as follows: buyers submit a maximum bid and the PriorityBid system will bid the lowest amount required for them to win, up to their maximum bids. Bids are confidential and the system will only raise a buyer’s bid if someone outbids the buyer. If the buyer is outbid, he or she receives an email notification. In the case of a tie, the first bid placed wins.

Since it was launched in mid-August, more than 25,000 PriorityBids have been made, with approximately 45% of those bids coming through Ritchie Bros.’ mobile application.

The feature was introduced in the Middle East at the Ritchie Bros. Dubai auction in October 2019.

“PriorityBid has quickly become a valuable feature for our live auction customers, allowing them to set a max bid on an item, go back to work, and let the system bid for them. PriorityBid also provides us increased insight into demand ahead of the auction, which is extremely valuable information for us and our sellers as it allows us to be more nimble in optimizing our marketing efforts right up to the day of the auction. We believe this will take online bidding in our live auctions to the next level,” says Werner.

As a company, Ritchie Bros. is evolving into a data-driven solutions provider of end-to-end asset management and disposition with offerings such as RB Asset Solutions. The cloud-based SaaS solution introduced in 2018 brings together a suite of tools and services to help customers better manage, analyze, and sell their assets by combining the best tools and services from other Ritchie Bros. brands such as Mascus and IronPlanet that have been offering SaaS solutions, with close to 100 inventory management systems and 800+ branded e-commerce sites.

RB Asset Solutions boasts customers such as Caterpillar, Volvo Construction Equipment, XCMG, Toyota, Shell, and their dealers worldwide. Komatsu Europe is the latest OEM dealer network to sign up for the service, using it to help better manage its assets internally and remarket its used equipment through a redesigned and mobile-friendly website.

As an RB Asset Solutions customer, Komatsu Europe is equipped with a complete inventory management system, which is accessible by all Komatsu Europe dealers, allowing them to manage their stock and publish used equipment to various sales channels, including their own individual dealer site, used.komatsu.eu, Mascus.com, or any other Ritchie Bros. sales channel. The used.komatsu.eu website, which was recently redesigned by the RB Asset Solutions team, is available via desktop and as a mobile app. Equipment can be searched and filtered by potential buyers by equipment type, manufacturer, hours/usage, location, price, etc. Additional data and multilingual marketing tools are also a part of the RB Asset Solutions package, helping Komatsu Europe better understand when and how to sell and advertise their assets to the world.

"There is no one-size-fits-all approach to selling assets. In addition to offering a global network of online and onsite selling channels, we help our customers manage their inventories and grow their businesses by integrating our cloud-based platform with their management software. The tools and services included with RB Asset Solutions are designed to help OEMs, dealers and rental companies become more effective in remarketing their assets every step of the way, from inspection to final sale," says Werner.

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