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New or Used Construction Equipment - The Return on Investment Decision

Aug 17, 2007
It has always been a debate whether to buy new or used construction equipment. Smaller fleets prefer to buy used heavy equipment as they attract less capital investments. Another reason for people to opt for used equipment is that they are sometimes as good as new and come at a very heavy discounted price as compared to that offered at the showrooms.

Moreover, Associated Equipment Distributors (AED) and TradeYard, Inc, have jointly announced an alliance that shall provide certified inspection of used construction equipment that can also be sold online. This has been done to boost the business-to-business sales via online medium. It gives better promotion to the sale of the equipment and buyers to be confident about their purchase. Usually buyers buy the equipment only upon the preliminary inspection done by the technical agent from either the buyer or the seller side. Since a neutral and unbiased inspection report shall be available it would lead to increased sales and more profitable bargains to small investors. Small fleet owners usually opt for used construction equipment sold from earlier projects. Large construction companies that carry huge fleets of machinery and can also strike a good bargain at onsite purchase of such certified used equipment.

There had always been a skeptical attitude towards the economies in the Indian sub-continent, Russia or Latin America. But over the past years these economies have shown a constant and steady growth. The demand to construct new projects or to renew the old ones has been always in demand. Since these countries are not as cash rich and affluent, they usually have constructors who have smaller fleets. Moreover, they also do not have enough capital to be invested in developing a large fleet. They are always on a look out for used machinery. Along with this these constructors take on projects in the neighboring countries and shifting heavy construction equipment is also not feasible. Thus sales of such equipments is constantly in demand.

Apart from the projects in these countries, bigger companies take up their projects in the continent of Africa and also the Gulf countries. Thus they opt to buy used construction machinery available locally from the companies or constructors who wish dispose off their fleets. The used heavy equipment are also on the sale due to the feasibility reasons that lie on the seller's side as well. The companies who have finished off their projects in foreign lands and take up projects in other countries, for such large companies it is more feasible to dispose off their machinery and assemble a new fleet at the onsite location rather than carry them to the new land. This is due to the reason that various countries have different rules for export and import of heavy equipment required for infrastructure development.

Some countries impose heavy taxes and import duties to restrict import of used concrete equipment. This is done to prevent the domestic markets and small construction companies with limited resources. Further, export of such equipment requires various documentation procedure, inspections and other legal formalities. All such activities are not only tedious but also time consuming. These formalities also require lot of duty fulfillment at both the ends. Moreover clearance at the ports and damage caused in handling and shifiting these equipments is also very tedious job. Thus construction companies prefer to buy new or used construction equipment locally. Only Large construction companies or companies who have strategic partnerships in the local market for a company prefer to import a part of their used construction equipment for their ongoing projects.
About the Author
Alistair Wilson, Heavy Construction Equipment engineer - focusing on Construction Equipment Rentals
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