How to Manage the Rise of the Used Equipment Market

“Fortune favors the prepared mind.” - Louis Pasteur

For some of us in the OEM business during the Great Recession, the memory of used equipment flooding the market and depressing demand and pricing is still fresh in our minds. Given the cataclysmic destruction of demand driven by the coronavirus pandemic, countless businesses are going under and being liquidated as we speak. It is causing untold hardship to the owners and employees of these businesses and will cause substantial economic dislocation globally. While the driver of this recession is different from 2008, the impact and results will be the same, if not worse, on the OEM market.

An overlooked consequence of business failures and resulting liquidation is the sudden availability of used equipment through auction or even sale by owner as they try to generate cash for their businesses. This will have a significant impact on new equipment pricing and sales as bankruptcies mount in the upcoming weeks and months.

So what is an OEM to do? We spoke to some of our customers who have been through this experience before, and here is a simple summary of their recommendations:

- Embrace the new market: While it may cannibalize your new equipment sales in the near term, the positive is that it is your new installed base. You may gain a whole new set of customers who will be targets for aftermarket parts and services, upgrades and replacement purchases. This could be a good thing.

- Create a Pre-Owned certification program: this includes equipment health checks, preventive maintenance, refurbishment, etc. The program could be offered as a service to buyers of used equipment, as a program to channel partners - or even a CPO if the OEM decides to buy used equipment and get into this market as well.

- Re-warranty your equipment: This could be part of the pre-owned certification process, or better yet, done for a fee. Audit the equipment that was purchased, and based on the audit offer a warranty (a new Service contract) to the new buyer. Protects them, protects you and offers a new source of revenue.

- Target these customers for Aftermarket Services: The odds are high that most of the used equipment buyers are “new to you”. Which means they probably aren’t familiar with your products, and managing and maintaining them. This is your opportunity to gain their confidence, and aftermarket business, by showing them how to get the most out of the asset.

These were just a few suggestions we gathered. Have any more? Share your ideas with your peers.