Used equipment eventually goes upwards

With more accessible purchasing costs and good negotiation of buying conditions, sales of used heavy equipment may increase up to 30 percent in this year

With the persistent economic instability and the difficulties in financing conditions of PSI/Finame, used equipment prices are rising again in Brazil. In the opinion of Luciano Bernardin, director of Robemar, used equipment dealer headquartered in São Paulo, the area will have a significant increase in 2015—possibly up to 30 percent—in its sales volume. “Not all clients—mainly small companies—may pay high down payments and installments when the economy is in crisis”, says him.

And also—according to Célio Neto Ribeiro, CEO of the portal Web Pesados—many contractors are holding their investments. Due to this reason they prefer to increase the useful life of their existing fleet, renewing it partially only with used equipment.

The positive scenario pointed by Antônio Augusto Ratão, director of the dealer Ratão, also headquartered in São Paulo, will occur probably after the second quarter of 2015, as result of a troubled beginning of year that is leading the contractors to debts related to financing already carried out and to a delay in the payment of rental discharges. Thus, the cyclic counterbalancing effect between new and used equipment will remain stabilized during the next years, changing the low-input pace faced by the market of used equipment since 2013.

Of course, these good perspectives are being very well-received by the industry, since the last two years showed a drop up to 70 percent in the revenues of some of these dealers of used equipment. And this relief is justified. Even not reaching all companies the same way, the crisis of the industry was really serious, increased by the availability of good purchasing conditions for new equipment, especially through Finame, the program of the National Bank for Economic and Social Development (BNDES) created in 2009 and still available.

CHANGE

For Bernardin, the market of used equipment is suffering for at least six years, since the “boom” of Chinese manufacturers in Brazil. “With sale prices similar to those of used equipment of traditional brands, Chinese manufacturers started to offer new machines even with possibility of financing through Finame, what affected deeply this market”, says him.

In the same way of thinking, Ratão believes that that this trend—started by the entrance of Chinese, Indian and Korean manufacturers—found  a breeding ground in Brazil, since Eastern machines fit the demand of the local consumer market in a slow but consistent way. “And in the last four years they started to be noted, since they are cheaper products with less on-board electronics, easier maintenance and perspective of profitability”, says the expert. “This policy resulted in a significant decrease in the prices of traditional new and used equipment.”

To compete in this changing scenario, some dealers created even different ways of payment, such as internal financing directly with the seller and in a few installments. Even so, it is a low-required optional in the industry. “These measures make easy the sale of used equipment up to 200 thousand reais. Above this price, sales become more difficult due to interest rates and client credits”, explains Paulo Henrique Alves Gama, sales professional of the portal Pesados Online, an initiative carried out since 2013 by Brasil Máquinas de Construção (BMC).

Another alternative available in the market is the trade in, which allows clients to give a used equipment as part of the payment. Some companies of the industry, such as BMC-Hyundai, use this way to encourage the sale of new models, accepting used machines of the same brand (and even of other brands) as part of the payment.

In the case of Liebherr, global manufacturer of heavy equipment, the trade in is carried out with a down payment and negotiated installments, discounting the value of used equipment, that is refurbished and returns to the market. “Since they are refurbished by the manufacturer, these machines practically return to their original conditions in terms of production and durability, but at a quite lower cost of buying”, emphasizes Marcos Gabriolli, company’s sales manager of used machines.