Advantages of Buying Used Construction Equipment

Construction business requires huge investment and a major chunk of investment goes for buying heavy construction machinery depending upon the project requirement. Therefore, it is always advisable to minimize the cost of the investment to make maximum profit out of the project.

There are four segments of construction machinery, Earthmoving equipment, Concrete equipment, road equipment and material handling equipment and buying this equipment is very costly affair.

Due to budget constraint, construction companies can’t take risk of compromising on the quality of construction materials, which will ruin the brand value of the company.

However, one option is always open for these construction companies to minimize the investment in purchasing the machinery used in the projects. Instead of investing in the new construction equipment which is necessarily costly affair, one can prefer to buy second-hand construction equipment from various dealer and e-commerce portals which are in the business of used construction equipment.

There are various advantages of buying second-hand construction equipment, which help construction companies to save huge amount of money.

Lower Cost

The new machine eats up huge money of contractors and buying used machine help to reduce the project cost. Second hand construction equipment is always available at lower price and used machine could be a better alternative from a financial point of view, when we plan out the investment for the project.

Avoid depreciation 

Within a first year of buying the new construction equipment, the value of the machine depreciates around 20 to 40 percent, depending on the condition of the machine, so your resale value is automatically reduced. Thereafter, the depreciation is gradual and not substantial. However, used construction equipment hold resale value, even you sell after a few years or after your project completion. Therefore, potential loss in selling used equipment is lesser as compared to selling new equipment.  

Choice and Flexibility 

Due to the emergence of e-commerce, many companies offer the services of buying and selling used equipment online, which give various options/choice for the buyers to buy equipment in their location or in budget.  When someone intends to buy used equipment he/she has flexibility to choose machine from their favorite brand, which one can’t have same flexibility when go for new machine due to budget constraint.  For example, if a small contractor wishes to buy Backhoe loader of JCB but due to shortage of fund he can’t buy the new JCB Backhoe loader, but he still has option to buy the same brand in used equipment.

Technology Concern 

As we are aware most of the construction equipment manufacturers are coming up with the latest technology and if contractors buy new machine they enjoy the features of the latest technology.

However, it does not make a huge difference on a project if someone uses the older version of the machine due to any reasons. The Heavy construction equipment industry has been very slow in adopting the new technologies, so it is not a matter of concern if contractors are using used equipment due to financial crunch.

Therefore, it’s important to make a choice between new and used equipment after taking all the above mentioned points into consideration.

Indian CE Industry to Grow Over 20% in 2016, Sales Surged 37% in First 6 Months

Due to rising infrastructure development in the country, Indian construction equipment industry is expected to grow over 20% to 58,465 machines in 2016, said a latest report of Off-Highway Research, a global research firm of construction and agricultural equipment markets.

Sales of construction equipment in India grew over 37% in the first six months (Between January and June) of 2016 when compared to the same period last year, said its specialist consultant and market forecasting study.

The sale of construction equipment could rise during this period, as Indian government has increased its infrastructure investment, especially in road and railways and actual construction work has resumed on the ground. Last month, government has informed the Parliament that Ministry of Road Transport and Highways had approximately awarded projects worth Rs 2 lakh crore in last two years.

Off-Highway Research’s report further says, Indian construction equipment market has witnessed a turnaround over the last 18 months, with sales falling to a low of 47,889 units in 2014, before enjoying a small increase in last year (2015). On the back of infrastructure investment, sale of CE products is expected to surge over 20% in 2016. It is also expected to sustain market (CE) growth for the next four years, albeit at more sustainable levels, it said.

“Infrastructure development is a key economic driver and enjoys an intense government focus that should accelerate demand for construction equipment in the country. India needs an estimated investment of INR 31 trillion (US$ 465 billion) over the next five years to keep pace with its growth targets, of which over 70% would be needed for power, roads and urban infrastructure segments. The total budgeted outlay for the infrastructure sector for fiscal year ending March 2017 is INR 2.2 trillion (US$ 33 billion),” said Off-Highway Research in its report.

It is projected, sale of construction equipment likely to rise to 73,595 units in 2020, if it touches this number, and it would break previous high of 67,898 units sold in 2011.

According to report finding, Backhoe loader is extremely popular machine in India and around 24,500 units expected to be sold this year alone and it represents 42% of the market in volume terms. Off-Highway Research believes the strongest long-term growth prospects are in the crawler excavator segment in India, it is projected to double in size between 2015 and 2020 to 22,000 units per year.

Major Boost to Construction Equipment Market as Cabinet Approves Rs.30, 836 Crore Infra Projects

In a major push to give a boost to the country’s infrastructure sector, the union cabinet has approved huge investment of Rs 30,835.86 crore for Railway and National highway projects across the country. The cabinet approved nine railway projects totaling 1,937.38 km and 1120 km of highway projects in five states.

The cabinet has given its green signal to nine railway projects in ten states worth Rs 24,374.86 crore include Assam, Jharkhand, Chhattisgarh, Maharashtra, Uttar Pradesh, Madhya Pradesh, Telangana, Andhra Pradesh, Odisha and Chhattisgarh and five national highway projects worth Rs. 6,461 crore in Karnataka, Odisha, Bihar, Rajasthan and West Bengal.

The news brings cheers on the face of construction equipment manufacturers and will give major boost to Indian construction equipment market, which has already started witnessing the better sell as compared to one year ago, all the leading manufacturers are bullish on better sales of various types of CE and material handling products.

In the budget 2016-17, government has committed to invest Rs 2.21 trillion for various infrastructure developments in current fiscal and allocated a mammoth Rs.218,000 crore for lone railways and roads in 2016-17.

When we look at the projects approved by union cabinet, Major railway projects fall under Maharashtra, Madhya Pradesh, Uttar Pradesh and Chhattisgarh, in these states Maharashtra alone received three railway projects. The cabinet approved construction of third line between Itarsi and Nagpur (Madhya Pradesh and Maharashtra) at cost of Rs.2,882.95 crore, this 280 km long railway line is expected to be completed in five years.

Another project which goes to Maharashtra is 201.04km long third line between Ballarshah and Kazipet (Telangana and Maharashtra) at a cost of Rs 2,403.22 crore and which is to be completed in five years and third project in the state, 228.3 km long third line between Rajnandgaon-Nagpur (Kalumna) in Rajnandgaon district of Chhattisgarh and Gondia, Bhandara and Nagpur districts in Maharashtra at a cost of Rs 2,193.53 crore, besides facilitating the travel, this project will benefit various industries, mines, coal fields and power plants will have additional transport capacity to meet their requirements.

In Uttar Pradesh and Madhya Pradesh, railway will construct 152.57 km long third line between Jhansi and Bina at a cost of Rs 2,273.84 crore, the project is expected to be completed in four years and another 273.80 km long third line between Mathura and Jhansi at a cost of Rs. 4,377.13 crore has been approved.

A 206 km long fourth line between Jharsuguda and Bilaspur will be constructed between Odisha and Chhattisgarh at a cost of Rs.2,298.31 crore and it will be completed in five years.

One railway project will be constructed in Andhra Pradesh at an estimated cost of Rs.3,875.68 crore, Indian railways will construct 287.67 km third line between Vijaywada Junction and Gudur Junction, the project is likely to be completed in six years.

One each railway project will take place in Assam and Jharkhand, 176 km second railway line between New Bongaigaon and Kamakhya at a cost of Rs 2586.85 crore will be constructed in Assam and third line between Kharagpur (Nimpura) and Adityapur at a cost of Rs 1483.36 crore will be built in Jharkhand.

Road Transport and Highways Ministry aims to increase the national highways’ length to 2 lakh km. This fiscal, government had decided to award 25,000 km of national highways as compared to 10,000 km in the last financial year and targets to construct 15,000 km in this fiscal.

The government commitment towards improving infrastructure of the country will drive overall construction equipment market and especially, multi-purpose equipment like Backhoe loader, excavator, various road building equipment and other.

States where government has approved railways and highways projects, will require a good amount of CE. By looking at government investment, infrastructure companies would think to increase existing number of their assets to grab the projects.

Escorts Construction Equipment Sales Grew by 45% in Q1

As investment from government, foreign and domestic players floating into India’s infrastructure sector and economy started improving; the actual work has started taking place on the ground, which leads to demand of various construction, mining and farm equipment in the country. The demand of the equipment started reflecting on growing sales of equipment manufacturers in the country.

Country’s leading engineering conglomerates Escorts Ltd, which is into diversified engineering businesses like Construction Equipment, Agri Machinery, Railway Equipment and Auto Products. In first quarter (Q1) of FY 2016-17, Escorts Construction Equipment has witnessed positive growth in construction equipment division and rising demand of construction equipment in the country led to the sale of its construction equipment. During April-June period of FY2016-17, it has sold 739 units of construction equipment ranging from various CE products against 508 units sold in first quarter ending June 2015, which is showing a 45% corresponding growth.

The sale of CE helped in generating more revenue for the company in quarter ending June 2016, revenue of the Escorts Construction Equipment jumped to 31.7 percent correspondingly to Rs 124.8 crore as against Rs 94.7 crore in corresponding quarter ending June 2015.

Escorts manufacturers and markets a diverse range of construction and material handling equipment like Cranes, Loaders, Vibratory rollers and Forklifts. Its diverse product portfolios are Material Handling Equipment (Pick and Carry cranes, Crawler cranes, Articulated boom cranes, Tower cranes, Forklift trucks and Truck & All Terrain Truck cranes), Earth Moving Equipment (ESCORTS DIGMAX (BackHoe Loader), Road Construction Equipment (Tandem Vibratory Compactors, Vibratory Soil Compactors, Wheel Loader and Motor Grader) and Utility Equipment (Telescopic Handlers and Fork Lift).

Speaking on the results, Mr. Rajan Nanda, Chairman of Escorts Ltd said, “The last quarter has shown a welcome upward trend in market demand. Sustaining it by the government taking advantage of a good monsoon would be important for the revival of the overall farm sector. The government has to provide a big impetus to farm mechanization, crop insurance and agriculture infrastructure. The construction industry too is showing signs of improvement and railways are on a healthy track. I am confident that if the economy continues to strengthen across sectors, our investments in better product mix, increased coverage, enhanced efficiencies and product innovation will deliver even better results.”

The India Meteorological Department (IMD) had projected better rain this monsoon, could be the reason to increase the sale of Agri Machinery during the June quarter.
Escorts Agri Machinery (EAM) witnessed the corresponding growth of 10 percent in quarter ended June 2016 in sale of tractors to 16,363 units against 14,875 units in quarter ended June 2015. The segment revenues increased to Rs 858.3 crore in Q1 FY2016-17 against Rs 793 crore during same quarter last year.

The revenues of Railway equipment division also witnessed an increase of 11.9 percent to Rs 54.5 crore against the corresponding quarter ending June 2015. The company said, Escorts Railway Products has a current order book of Rs 100 crore (approx.) which will stand executed in next 7 to 8 months.

The company was a pioneer in introducing the concept of Pick ‘n’ Carry hydraulic mobile cranes in the 70s in India and continues to be the world’s largest manufacturer of these cranes, company claims on its website.

Escorts was the first to bring the concept of Vibratory Compactors in India in a big way, back in 80’s. Subsequently, more models in Tandem Vibratory Compactors and heavy duty Soil Compactor range were added in technical collaboration with HAMM Germany. Recently, it has further strengthened the range with a 3T Shoulder Compactor.

Today its range of compaction equipments is one of the most preferred in the market, and is being viewed as the most efficient and effective compaction solutions available in the country, claims the company.