Key Takeaways for Decision Makers
FINANCE: The high diversity of equipment on the resale channel in this region is an indicator of a strong market infrastructure and sustained equipment demand.
As we continue moving southward from last month’s Regional Snapshot, we reach Region F, the Southern States. These 4 states, starting with Arkansas in the east and stretching west across Texas, have a diverse resale market for heavy equipment. This month, we’ll be examining Region F in this next installment of our recurring Regional Snapshot.
Since January 2016, EquipmentWatch has collected approximately 389,079 observations from the resale channel for the states in Region F (listed at the bottom of this article). Over the last 13 months, four of the top six equipment types in this region are typically found on construction projects, although the regions agricultural presence is apparent in the dominant position of wheel tractors.
Wheel tractors comprise the largest individual equipment type for this region, with over 13% of the entire data set. The remaining five top equipment types average less than 5% of the resale market each. In fact, the top six equipment types only cover approximately 34% of the region’s activity, one of the lowest concentrations to date in this series of Regional Snapshots. This is a testament to the economic diversity of Region F. Portable light towers are the 3rd most common type of equipment, another first for this region. This could be expected, as regions with higher average daytime temperatures are likely to see more projects working in late hours and creating a booming market for light towers.
Given the wide variety of equipment types available on the resale channel in Region F, there are a substantial number of major manufacturers represented among the top six equipment types. Deere takes the majority in agricultural equipment, with nearly 70% of the wheel tractors available over the last year. Caterpillar and Deere dominate the traditional earth moving equipment types like excavators, dozers, and backhoes. Among telescoping boom rough terrain lift trucks (telehandlers), the market distribution is much more even—JCB leads with 21%, but is followed closely by Sky Trak and JLG. Magnum, Amida, and Ingersoll Rand comprise nearly the entirety of the portable light towers available in this 13-month period.
When we examine average asking prices for the top six equipment types in Region F, we see fairly similar trends. Dozers, excavators, and backhoes all witnessed a peak in this region between February and March 2016. Telehandlers actually saw positive trends in asking prices through the 2nd quarter of 2016 before leveling off at the end of the year. Wheel tractors showed some volatility in summer and winter months, but on the whole (excluding January 2017) did not exhibit the average 9% to 12% decline in FMV seen nationally in the market for agricultural equipment. Portable light towers actually showed substantial decline from January 2016 to January 2017, although much of this may be due more to asset mix changes than to shifting supply or demand.
Region F contains the second largest economy in the United States in Texas, which also had one of the fastest growth rates in real GDP through September 2016, according to the BEA. Unfortunately, the other states in this region were among the lowest in the country. However, with renewed interest in the energy sector and hope for a resurgence in the agricultural sector, the outlook for the heavy equipment resale market in this region is positive.
Region F: Arkansas, Louisiana, Oklahoma, and Texas