When ‘Used’ Is A Sound Investment

The recent heavy plant and machinery sale organised by Euro Auctions was a runaway success. Plant & Equipment’s Munawar Shariff has the details.

We’re all looking for a bit of good news these days. So when Plant & Equipment attended Euro Auctions’ heavy plant and machinery sale on March 9, we were pleasantly surprised to witness what a resounding success it was. Derek Bleakley, General Manager at Euro Auctions, says that this year customer interest, lots on sale, prices, bidders and eventual buyers were 100% up compared to March 2019, proving there is real demand for good used machinery and equipment right now in the Middle East.

Derek Bleakley, General Manager at Euro Auctions.

“Over the last 24 months, we’ve been working hard to get to know the consignors and buyers in the Middle East, and have been working with them to establish good relationships and mutual trust,” says Bleakley. The company has regular consignments of good stock coming through its auctions, in the right quantity and of a quality that buyers want. And in doing this, it is getting happy customers who are returning to sell and buy at each sale, contributing to the doubling of all statistics over the same sale last year.

Bidders came from across the Middle East, including the UAE, Lebanon, Saudi Arabia, Jordan, Turkey, Egypt and Pakistan, plus there was a strong Western European contingent, with the UK, Netherlands and Germany well represented.

Preparing for the auction

There is a lot of background preparation undertaken by Euro Auctions when it comes to curating the lots included in any particular sale. Bleakley says one of the real reasons for its success is being realistic in the valuation of the machinery and equipment. “There’s no point in over-valuing only to disappoint consignors when the hammer goes down,” he adds. This alone brings repeat consignors. The firm also has a transparent commission structure that lets the consignors know exactly what they are going to pay in costs before the sale, with no additional charges for ancillary items such as fuel, washing, unloading or loading.

Besides its straight-forward working policies, Euro Auctions has a firm marketing plan and outreach to get bidders and buyers and to keep them interested. Starting about a couple of months before a sale is scheduled, online marketing on multiple social channels is executed. “In the Middle East, online marketing works better than any other mechanism, and we are using pre-auction videos to engage our audience via YouTube and other social platforms, plus WhatsApp and Google AdWords,” says Bleakley. In addition, the Euro Auctions global campaign includes marketing to buyers and sellers in over 95 countries, using off-the-page advertising, brochures, direct mail, and finally targeted public relations and media campaigns. The firm has received immense traction by putting listings on PlantAndEquipment.com, as the website provides a lot of enquiries and interest from buyers regionally and around the world.

Buyers look on at the auction in progress.

The market after coronavirus

We have to address the elephant in the room – the impact of the coronavirus on the industry. We ask Bleakley if perhaps the recent sale’s success was due to the fact that buyers thought the market was going to slow and hence decided to store their cash in these machines, which have historically proven to be sound investment avenues for industry veterans. “If you’re suggesting panic buying, let me tell you this industry does not panic buy,” he says. “The industry buys strategically for customers or for upcoming projects. The arrival of COVID-19 and its effect are coincidental and was not an influencer on the result of the sale.”

In mid-2019 there was an up-tick in the market for good machines, but contractors and rental companies in the Middle East have been buying relatively low levels of new machines for the last four to five years, and as a result stocks of machines have been getting old. Not buying through dealerships, buyers have now turned to auctions for good late-year machines as well as new unused stock.

“With oil prices now falling, in the future there may be a case of panic selling to generate cash flow in the short term, as opposed to panic buying,” Bleakley says.

The sale was held in the early days of the spread of the virus in the Middle East, just before control measures were put in place by regional governments, he says. “During this sale buying speculation was high, with buyers looking for a deal. The equipment on offer was of a high standard, and as a result prices were strong. Also, at the time of the sale the exchange rate of the euro to the dollar was high, which attracted more European buyers to the sale.”

After the pandemic

The market was improving in 2019 and into early March 2020. Growth was positive, interest for quality machinery was showing green shoots, and the demand was evident.

Bleakley opines that when construction and infrastructure projects resume after the pandemic is over, the market will be in for a good start. There is news that original equipment manufacturers (OEMs) such as JCB and Caterpillar are halting production at all manufacturing plants globally, including production sites in China. Many OEMs are predicted to follow suit, as happened in 2008 – when demand returned then, OEMs were unable to accelerate production. When the economy does return, the demand for good late, low-hours equipment is likely to soar, fuelling interest in the used equipment economy.

“There will be a higher demand for machinery. Rental businesses will want to replenish their stock levels, as they do on a regular basis. Construction companies will be buying for projects, and new equipment will be in short supply. As a result, buyers will be looking to the used machinery markets and auctions, which is good for sellers,” Bleakley concludes.