Performance of the Used Machinery Market - Part One

The economic slowdown of the past two years has had its impact on the prices of new machinery. In some cases, these have come down by as much as 30%. And yet, paradoxically the same fall in prices has not been witnessed in the used machinery sector.

This has led to the gap in prices between used and new machinery to narrow or become less. Customers can actually consider arranging finance for new machinery. Sellers of used machinery set an asking price based on the book value of the machines and the market price is governed by the tug and pull of demand/supply. Moreover, for different sellers the same machinery may yield varying prices because of different depreciation techniques used.

To compound issues further, the demand - supply scenario is fluid and can often change without notice.

Factors that affect the demand-supply include -

• Induction of new technology can free up machinery using existing technology for the reseller market
• A shortage of new machinery in a particular market can make used machinery an attractive proposition
• Regulatory changes in one region can render old machinery non-compliant over there but still of use in other markets
• A strong presence of OEM after-sales in a market boosts sales of used machinery of that particular brand

If we take the example of plastic machinery, then factors that affect the price of used plastic machinery include brand, auxiliary and other equipment accompanying the used machinery, age of machine, state of maintenance, extent of refurbishing, documents available, and whether the machine is in dry cycle or dismantled.

Because of the factors mentioned above, there is price variation across regions in the used machinery market.

As a buyer you need to know if the used machinery you're interested in is offered to you at the right price. It is best to take the help of experienced assessors that can place a tangible figure on the various influencing factors explained earlier. You can save an appreciable amount and more importantly get apprised of the best deal for you when it is available if you choose the services of a good broking firm.

For example, a broker in the know will be able to quickly assess whether going for the cheapest machinery available is best suited for your needs. Very often it is not quite the right solution. Also, an agency that specializes in such buy-sell can judge the impact of a major technology advance on the price of existing technology; often the introduction of new technology can devalue used machinery much more than what the book value will suggest.

Cesar Rodriguez, MachinePoint CEO, the largest broker of European used machinery for the plastics and beverage industries. Over 15 years experience in selling used machinery and running a team of over 40 people dedicated to this business. Cesar is an expert in the trade of used machinery and a well known person in these industries.

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