Whether it is oil and gas, manufacturing, infrastructure, construction, or mining, there is a huge demand for heavy machinery and equipment in the UAE. While there are several OEMs – original equipment manufacturers are ready to cater to the ongoing demand of different industries with various equipment categories. There is also a vibrant and thriving used equipment market.
The most obvious advantage for anyone wanting to buy Used Construction Equipment is that it is cheaper. A piece of new equipment depreciates when it comes out of the showroom. The drop in value is the highest in the first year of operation.
Buying a used machine avoids this tangible loss. And suppose one is getting a model sparingly used in the first couple of years. In that case, it is prudent to go for used equipment that will be productive and give a better return on investment (ROI).
Another advantage is that finance companies give loans on used construction equipment for up to 80% to 85 % of the asset cost. It means that one has a lower monthly financial repayment.
If one wants to buy a forklift or a JCB backhoe loader, then the choice is to purchase a new one or a used model. Taking a decision is based on factors like financial condition, the project type, where the equipment will be used, including the project contract terms and conditions, payments by the client, tenure of the project, and the cash flow from the operation of these equipment’s so on.
As an owner of this equipment, one needs to do a cost-benefit analysis before deciding. It is futile buying new equipment used for only a couple of years in a project and then kept idle in the yard. For example, an average forklift lifespan is around 10,000 hours. If it operates for at least 8 hours daily, it has a 6-7 years lifespan. So, one needs to recover the investment cost plus profit within that time frame. If there is no long-term agreement with the principal company, the asset will give negative returns in its lifespan.
A used forklift of 1-2 years old comes at around 30%- 40% discount. Buying one from reputable heavy machinery companies, such as Anwar Al Quds Machinery (AAQ), would ensure that one gets well-maintained equipment with complete service history, usage details, and no meter tampering. The dealer would also provide a warranty for six months to one year or an extended warranty on the used equipment where any parts replacement is taken care of. It means that the used equipment is in good condition when purchased. When equipment has warranties and other after-sales support services, it maintains the condition and enables the reseller to get a reasonable resale price.
As a thumb rule, one should not keep a forklift or a loader beyond seven years. The asset is depreciated by that time, and the performance levels go down while repair costs escalate. The risk of accidents occurring is high, and insurance companies do not support the claim because of the age factor.
On the practical side, many construction companies do not allow contractors to deploy old equipment beyond a certain age in the project. The rates per hour or monthly offered on the equipment also vary. So, if anyone wants to invest in high capital cost assets, all the pros and cons and some future planning are needed to avoid losses in the long run.
If you are in the UAE, purchasing used and refurbished equipment from dealers such as AAQ Machinery is good. They have an extensive used equipment inventory and provide quick service after the sale.