One part of the economy for which doom and gloom predictions have not materialised is the used construction plant sector, as Ritchie Bros. has witnessed with its recent auctions in September.
The world’s largest heavy equipment auctioneer switched to online-only auctions in the pandemic and has seen record-breaking auctions all over Europe, including in the UK. The auctioneer has held auctions in June and September at its Maltby site in the UK, seeing massive increases in the number of items sold, indicating equipment utilisation is at peak levels, with the market showing a strong appetite for used machinery.
The high level of auction lots has been driven by the need to release capital for fleet renewals and a change in focus for an industry that is now more driven by asset utilisation, as Rupert Craven from Ritchie Bros. UK explains:
“With infrastructure and housing projects driving demand for plant and HS2, in particular, focusing on emissions and productivity, we are seeing a need for plant operators to invest in new equipment and a reduction in the average fleet renewal cycle. “Also, when it comes to buyers, due to a squeeze on the availability of new equipment with factories catching up from lockdowns, there has been a surge in demand for younger equipment, which meets the emissions standards demanded by larger projects. This favourably impacts bidding activity and, therefore, the returns for articulated dump trucks, technology-enabled excavators from 20 tones and above, and other in-demand items.”
September auction facts
Intensified bidding activity pushes up price levels. UK equipment was 2% cheaper for overseas buyers due to changes in the pound.
The UK and The Netherlands auctions were held in the same week in September, with 6,500 lots sold. UK equipment owners also sold items at the Moerdijk, The Netherlands auction as a gateway to the European market.
Equipment buyers embraced e-commerce amid the COVID-19 pandemic, with nearly doubling bidder registrations compared to the September 2019 auction
Changing behaviours reshaping the industry
Rupert Craven, who’s been working in the heavy machinery industry for 20 years, has seen the mentality of the market change during the COVID-19 pandemic. “Businesses now look much harder at lifecycle costs, utilisation, and equipment valuation. Particularly with the latter, more businesses are calling us to guide them through the process of fleet evaluation and disposition options that can include selling newer equipment by utilising our data to obtain the best prices.”
An interesting new phenomenon is that companies in the UK and Europe ‘buy for the job’ and resell. Rupert: “We have witnessed plant being bought for a six to twelve-month job and then being resold at our Maltby auction with residuals holding up very well.”
Where the auctions pre-COVID were attended both in-person and online, they’re now only held online with an easy-to-use bidding system that is open for several days. Although born out of necessity, the online-only auction format attracted a record number of participants and generated strong returns for sellers. “What is also interesting is the change in the online bidder profile, which again has been dramatic, as more people get comfortable with doing business online. There are now many more bidders globally and a large increase in individual bidders, following the other trends we are seeing.”
“What is clear is the construction and plant sector is in much better shape than most commentators predicted and in some cases with large infrastructure projects, we are even into boom times, the likes that have not been seen since the motorway building era. And of course, we can’t underestimate the continued global demand for equipment that has been well looked after by UK plant operators.”
Ritchie Bros. conducts numerous auctions across the world and is currently in the final stages of a major redevelopment of its new 20-hectare site at the old Maltby Colliery, South Yorkshire, where it conducts auctions throughout the year. The auctions continue to be held online only for now, with interested buyers viewing items both on the website and the auction yard.
The next Ritchie Bros. auction in Maltby will be held on 26th & 27th November, presenting an opportunity for businesses to sell before the end of the year or add items to their fleet. For more information, visit rbauction.co.uk.