In recent years, the used machinery market has established itself as a major player and popular supplier of heavy machinery. From industry to agriculture, businesses and companies are increasingly turning to used plant and machinery. The market is booming – for a variety of reasons.
TRENDS & DEVELOPMENTS IN THE MECHANICAL ENGINEERING INDUSTRY
The German Engineering Federation (VDMA) confirmed a mixed result for the German mechanical engineering industry in 2023. Orders fell by 12% compared to 2022. However, there were signs of weak demand for machinery worldwide.
The order situation is also an expression of an economic trend that is repeatedly characterized by fluctuations. These were exacerbated by the coronavirus pandemic, which continued to have an impact on orders and prices in the mechanical engineering sector afterwards. The Russian war of aggression against Ukraine exacerbated the situation even further.
Many upheavals on the machinery market
In its market report for 2022, the VDMA already referred to various trends that had a simultaneous impact on the mechanical engineering sector:
- Following the international economic slump in the wake of the coronavirus pandemic, an initial economic recovery in 2021 led to price increases.
- Due to the disruption of supply chains and long delivery times for metal and electronic products, prices continued to rise because the growing demand could not be met.
- Added to this were the developments on the energy market, which also drove up energy costs.
All of these factors mean higher costs for the industry: manufacturers have to factor in higher operating, purchasing and labor costs. As a result, the prices for new machines have risen and demand greater investment. This is one of the reasons why the market for used machines is flourishing.
BUYING A MACHINE: NEW OR USED?
Rising production costs and therefore higher prices for mechanical engineering products on the one hand and more expensive loans due to higher interest rates on the other: under these conditions, investing in new machinery and equipment is a financial challenge for many companies.
At the same time, the increasing digitalization of industrial processes, the transformation of some industries such as the automotive sector and the continuing acute shortage of skilled workers are increasing the pressure to invest. SMEs in particular must therefore look for solutions that are economically plausible for them.
Used machine market as an alternative to new machines
For many companies, this now means upgrading their production lines or operations with used machinery. This applies to a wide range of industries, from manufacturing to agriculture.
The most important reasons for the decision to rely on used machines:
- Cheaper and less susceptible to inflation: While the price development of new machines is strongly influenced by cost increases, this applies much less to used machines. Fluctuations are lower here and prices are correspondingly more stable.
- Faster availability: Even if the purchase of a new machine is a long-term investment, there is often a short-term need. However, if the supply chains do not work and delivery times are extended, used machines are available more quickly.
While the mechanical and plant engineering sector had to contend with fewer orders and higher costs for its products, prices on the used machinery market remained largely stable. Constant demand and an almost constant supply also ensured a good price trend – at least for those who want to sell their used machines.
However, the best decision in the end – whether to buy a new or used machine – depends on other, individual factors.
Used machinery market continues to develop
Thanks to its advantages, the used machinery market has become increasingly attractive in recent years: Used machines for various industrial and economic sectors are in demand because they are cheaper and offer more flexibility through better availability.
A 2023 survey of customers of the pan-European online auction house Surplex confirms the growing importance of buying and selling used machinery. The respondents were mainly micro-enterprises and medium-sized companies. The results of the survey:
- Of the participants in the survey, 41 percent expect the used machinery market to grow even faster than before.
- This is also due to the great interest in used machines – 40 percent of those surveyed plan to make similar investments as in the previous year, and a third even want to invest more.
However, it is not only the size of the used machinery market that is changing; supply and demand are also subject to change. Surplex states, for example, that the sale of older large machines was still difficult. In the meantime, however, popular machines such as CNC systems are selling well again. This in turn results in rising prices, which can be achieved at internet auctions, for example.
Prices on the used machinery market: Other parameters for price trends
However, prices on the used machinery market follow different “rules” to those on the market for new machines. One example of this is the influence of inflation, which has already been touched on above in the context of rising production and energy costs.
Prices for used machines react to external factors with a certain time lag and generally less strongly. If there is an increased demand for new machines in an industry, the corresponding used machines also become more expensive. However, the price increase has recently always been below the inflation rate, according to Surplex’s valuation department.
However, just like on the primary market, supply and demand also determine the price on the secondary market. This means that a larger supply on the used machinery market also leads to lower hammer prices – and vice versa. It is therefore always advisable to keep an eye on supply and prices at used machinery auctions if you want to expand your machine pool at a lower cost than new purchase prices.
DIVERSITY ON THE USED MACHINERY MARKET
Companies from a wide range of industries can find what they are looking for on the European market for used machinery. Leading providers of used heavy machinery and industrial vehicles include Mascus, Ritchie Bros, Surplex and Euro Auctions. The range on offer is diverse and interesting for both small and large companies.
From attachments to machine tools
The used machinery market offers everything from tractors and cranes to machine tools. Ritchie Bros, the Canadian-based auction house for construction machinery, agricultural machinery and trucks, provides an overview of supply and demand as well as the most important buyer countries for agricultural, construction, transportation and material handling machinery every quarter.
The report for the first quarter of 2024 shows an increase in the number of units sold in all categories listed: More tractors, front loaders, shovel excavators, trucks and telehandlers were sold compared to the previous year. A similar trend can also be observed in the listed units, which increased across the board.
However, the situation is different in terms of demand. Although there was a slight increase in demand for tractors compared to the same period in 2023, fewer tractors were requested during the first quarter of 2024. The trend is similar for shovel excavators, trucks and telescopic handlers, with demand for the latter remaining at the same level as in 2023.
However, the experts at Ritchie Bros expect the construction machinery market in particular to normalize in 2024. As more new machines are available on the European market again, the auction house anticipates weaker demand for used machines.
| ONLINE INSPECTION FOR USED MACHINES
Digitalization has also long since found its way into the buying and selling of used machines. Sales are therefore often no longer made on site, but online. In order to give buyers as complete a picture as possible of the machines on offer, in addition to detailed descriptions, technical data sheets and images, 360-degree inspections are sometimes also made possible or videos are provided. In this way, a visit to the auction site is not mandatory, but the auction houses can still create a sufficient basis of trust. |
MACHINE CYCLE MANAGEMENT WITH ALICIA
The fact that used machines are becoming increasingly important is also due to the concept of sustainability. If used machines are used and reused for longer, the need for new equipment decreases. This means that less raw materials and energy have to be used and manufacturing companies can improve their environmental footprint.
ALICIA: Circular economy ecosystem for production facilities
The Institute for Machine Tools and Industrial Management (iwb) at the Technical University of Munich (TUM) has been researching the development of a circular economy ecosystem over a total period of three years since 2023. The CME (Circular Manufacturing Ecosystem) is intended to help reduce the material and energy requirements of new production lines through the use of second-production systems.
The ALICIA project (Assembly Lines in Circulation) is a collaboration of 12 European partner organizations under the leadership of the iwb. The starting point for the research work is as follows:
- Many parts of production systems are not used for their maximum service life. Instead, robot arms, conveyor belts and similar components are replaced early and taken out of operation.
- According to experience from the automotive industry, the proportion of production resources that are retired prematurely, scrapped or sold as spare parts is 60 to 70 percent.
- In contrast, the project aims to enable used production lines to be redesigned, provided, operated, decommissioned and put back into circulation more quickly. Those responsible at ALICIA are aiming to speed up processes by 40 percent.
- Another aim of the project is to reduce material consumption for production lines by up to 80 percent and increase the rate of asset reuse to up to 100 percent.
Challenges in the circular economy for used machines
More resource conservation, more resilience against disrupted international supply chains, more circular economy: the overarching goals of ALICIA can only be achieved if those responsible can overcome a number of challenges. These include, for example, compatibility problems between different generations of systems and manufacturers. It is also difficult to estimate the remaining service life of used equipment.
Because of these challenges, the ALICIA project is pursuing several approaches:
- In a first step, the iwb is developing an ontology with the project partners in order to record the requirements of the factory operators.
- Second-hand and new production resources are managed on an online platform that can be used throughout Europe.
- An AI-supported algorithm then compares the requirements and the available resources.
- The AI also suggests production lines and models them in the form of a digital twin. This is intended to make planning and purchasing decisions easier.
- As part of the project, plug & produce middleware is being developed to simplify the integration of second-hand systems into existing production lines. A digital twin will also be provided for commissioning and management during operation.
The project also examines new business models based on the concept of Circularity-as-a-Service. The online marketplace ALICIA and the new business models are to be integrated into the EU market segments for machinery, equipment and machine repair services, which contribute to the EU economy with a value added of several hundred billion euros.
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