Hey everyone, I haven't been as active as I've wanted too because of how dang busy I am with school. Even though I'm a senior, I still have a ton of work like I have every other year. For my honors program, I have to write a bunch of research papers and I'm doing pretty much all of them on construction/equipment related topics. For my math class, I'm going to do a paper on creating a mathematical formula for determining the optimal ownership period of heavy equipment when considering depreciation, maintenance/repair costs, and the time-value of money. For this, I'll need Residual value and repair data, so if anyone has records of their own equipment I would be extremely grateful if you could send it to me, and it would be a great source for my project. I'm looking forward to sharing my progress over the next few months and getting feedback. If anybody has thoughts or advice, that would great too. here's the progress of one of my other papers: https://docs.google.com/document/d/1cpZ_8Vhhc8iZAcHrxkqQVF2DyefgTQM02LfFSd628QA/edit?usp=sharing
Machinery Trader is a great resource for determining the "retail" value of used equipment. Choose the type you want like D5K2 from 4000- 5000 HRS. Year model doesn't matter as much as model and hours. When it gives you the machines you have filtered go to the top right of the page and click High/Low Average. Now take the average Retail Price and the Average Auction price then average the two. Use the average price of both without the Highest and Lowest price. This value will give you a base number to value a particular piece of equipment. Of course condition, configuration, etc make a further difference, this value is a good starting point.
I've been using machinery trader, but I didn't know about the average function. Thank you for that
You are undertaking a pretty large project with a lot of variables. There have been plenty of people try to do same thing and have given up because of all the variables and small details. First item is the types of tasks a machine is being used for. Mining in hard rock will be different than mining in sand and gravel. Construction work will be different by type. Roads are one type, underground utilities are another compared to residential development or logging and so on. So in addition to your use you have to consider what types of machines you are going to be working with. Logging machines depreciate faster than everything other than crushers and screening plants. Dozers in mining are used heavily in mining but not so much in construction and logging any more. Wheel loaders are being used for incredible numbers of hours now days so wear and tear and market depreciations are pretty slow. Motor graders are another machine that lasts for years and years. Depreciation is another issue that will be difficult. Are you talking about wear and tear depreciation, lease return, tax depreciation or market depreciation? You will have to define which and then develop a formula that works consistently. I haven't done a tax depreciation schedule in a long time but those used to be based on seven years of machine life. That gets changed all the time when the politicians want more votes they enact accelerated depreciation. Leases also have tax issues but their depreciation on a straight lease was usually based on five years. What they were figuring on was working from a residual value at the end of the lease. The purchase price is the start of the lease and the residual is subtracted. Then the values are figured for each month the lease is in force. There are multiple types of leases which are handled differently. The wear and tear has to be considered from actual operation in a specified use and type of material.I did wear and tear numbers for some customers but those need real world records. The variables include the maintenance and repair philosophy of the owners. Do they do their own maintenance or hire it out to dealer service or independent contractors. Do they rely on exchange components or rebuild them on their own? How are unforeseen damages handled. What kind of insurance coverage do they have. If you can get hold of a Caterpillar Performance Manual, it provides a lot of numbers and formulas to get started with. That can also give you direction on cost per hour operations At best though those are only a guess.
I agree with CM1995 but can narrow that down a little more from a dealer standpoint. I don't automatically throw out the high and low anymore. I'll go through each comparable and remove them if they are way beyond market range either high or low. Sometimes the high lows are within market parameters and usually there aren't enough units to get a good read. I'll take the average retail asking price and multiply it times 0.65 which would be 35% and is the current average profit margin dealers are looking to receive right now depending on the type of machine and their market area. That will give you an idea of what purchasing a used machine is likely to cost. The auction average is usually reduced by whatever is usual and customary for a buyer's premium. It used to be around 10% but I'm sure has gone up. You can check on that on the Ritchie Bros web site in the terms and conditions page. I do a market research paper every month now for some of my old clients that documents the current markets for select Caterpillar machines. I can't post a spread sheet on here but if you send me a DM with your email address I can send you this months spreadsheet. I do it on my own with no AI involved.
It is available to download from the internet. https://wheelercat.com/wp-content/uploads/2025/03/Cat-Performance-Handbook-Edition-50-June-2022.pdf