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Tier 4 Machines Inflate Prices on Used Non- Tier 4 Models12-19-16 | News

Tier 4 Machines Inflate Prices on
Used Non- Tier 4 Models

Results of IEDA Survey Discloses

Currently, there are reported to be few Tier 4 machines in the used equipment market and a new survey by the Independent Equipment Dealers Association forecasts that the market is four to eight years away from newer machines dominating it.

Possibly thanks to the added maintenance costs and performance compromises of Tier 4 machines, the demand of non-Tier 4 equipment is being driven up and resale prices on this equipment are increasing by as much as 20 percent. This is the finding of a recent survey of Independent Equipment Dealers Association members.

According to the organization, though some categories of used construction equipment are seeing availability outpace demand, other categories including excavators, backhoe loaders, wheel loaders and compact equipment are witnessing the opposite. The survey's results also predict that this trend will continue for the next several years. And more than 50 percent of respondents noted that quality used equipment is getting harder to find.

"The current used equipment market is strong, but it will be affected by Tier 4 machines in the near future," says Drew Van Brunt, IEDA President and Owner of Global Tractor Company in Colleyville, Texas.

Wayne Clark, the emissions business manager for the large Caterpillar dealer in the Northeast U.S. Milton CAT, asserts that Tier 4 engines, with their added components and bigger cooling package, require a larger compartment, translating into a larger machine and in some cases modified cab and seat designs. On top of that, new maintenance practices, and more frequent old maintenance duties, along with higher purchase costs that might not be offset by improved fuel efficiency savings, are added to the overall picture of owning Tier 4 machines.

And there are reports that construction company owners are getting negative feedback from their operators regarding Tier 4 performance.

According to Mike Buckantz of Associates Environmental, in most of the country there is not a phase-out or drop dead schedule for non-Tier 4 off-road diesel equipment, but he encourages everyone to check their local regulations, particularly for projects in high-population urban areas, because there is a growing number of project-specific tiered-equipment requirements mandated by project owners. He states that these specific requirements are typically in bid documents.

"The situation in California is a little bit more involved," Buckantz adds. "There is no de facto phase out date for non-Tier 4 equipment since each off-road fleet's requirements are slightly different based on things like total horsepower, fleet age and fleet average emissions. Also, there are low use provisions that can be employed to extend the life of non-Tier 4 equipment under certain conditions."

He cites the following California prohibitions related to adding non-Tier 4 equipment:

???(R)???AE? As of January 1, 2014 no fleet can add a Tier 0 piece of equipment.

???(R)???AE? As of January 1, 2014 large and medium fleets (those with 2,500 horsepower or greater) cannot add Tier 1 or older engines to their fleets.

???(R)???AE? As of January 1, 2016 small fleets (those with less than 2,500 horsepower) cannot add Tier 1 or older engines to their fleets.

???(R)???AE? Beginning January 1, 2018 large and medium fleets (those with 2,500 horsepower or greater) cannot add Tier 2 or older engines to their fleets.

???(R)???AE? Beginning January 1, 2023 small fleets (those with less than 2,500 horsepower) cannot add Tier 2 or older engines to their fleets.

"There is no prohibition on adding Tier 3 engines to a fleet of any size," he says. "However, as a practical matter, by the 2022/2023 time frame large and medium fleets will need to have a fleet with nearly exclusively Tier 4 Interim and new equipment to comply. For small fleets this date range is in the area of 2027/2028."

In the IEDA survey, 37 percent believe Tier 4 machines will not retain their value as well as non-Tier 4 equipment. On the flip side, if more construction projects demand the use of Tier 4 equipment, the value of non-Tier 4 machines would quite likely drop in the future.

The used equipment market is forecast to be four to eight years away from being dominated by Tier 4 machines. The IEDA feels that at that point, non-Tier 4 machines will be harder to find and pricing on the newer ones will stabilize.

Kristen Williams, the organization's executive director recommends buying from an IEDA member as quality, non-tier 4 machines get harder to find because, "Members stand behind what they sell and work together to help customers find exactly what they are looking for." To see machines that are currently for sale by IEDA member dealers go to https://iedaused.com/HomePage_Visitor.aspx