Industry consultants Ernst and Young, in its 2016 Australian Yellow Goods Report, have confirmed that "values for yellow goods [large excavators, large haul trucks, small haul trucks, dozers and loaders] in the mining sector have continued to freefall over the last 12 months on the back of minimal demand and significant supply". However, there appears to be a light at the end of the tunnel for the construction and general purpose sector.
Their analysis indicates auction clearance rates in excess of 70% and generally improving valuations for construction and general purpose equipment compared to auction clearance rates around 60% and generally declining valuations for mining equipment.
The key industry takeaways of the report include:
The overhang of stock available for sale has reduced since September 2015 (although up from the low in March 2015). EY suggested that it's likely that the reduction in supply is due to both a narrowing of the valuation gap between the expectations of buyers and sellers and a reduction in overall supply as those who can bear the burden of holding costs to do so in the hope of a recovery in values.
Our analysis indicates that there are signs of a recovery in the construction segment of the yellow goods market:
Due to the significant fall in commodity prices, the story in the mining segment is much bleaker:
Given the decline in commodity prices for bulk operations like iron ore and coal, it's no surprise that there's reduced demand and increased supply for that fleet compared two or three years ago.
Head of metals and mining with EY for the Oceania region, Paul Murphy confirmed "the value of specialised mining fleet equipment fell more than equipment that can be redeployed to use in other areas such as civil construction or quarry."
ABC Rural reports that disruptive technologies are wreaking massive changes on existing sectors. Paul Murphy believes that same lateral thinking could be applied to use of the idle mining fleet.
"The market for this second hand equipment is one where there is over-capacity now and into the foreseeable future.
"So if you just look at the cases of Uber and Airbnb and other models, they're about capacity utilisation.
"So whether in cars or accommodation there was available capacity that wasn't being used. And we've got exactly the same situation here."
It would be very difficult not to end this post by saying ... we're already here. And we've got some 2,500 suppliers, over 700,000 items for hire and $100 million in awarded work through PlantMiner to prove it.
If you're interested in getting your gear out of the yard and building your online presence, register for a totally obligation-free demo or give our team a call on 1300 550 434 and see how PlantMiner can grow your business.
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