AT A GLANCE
Several fleet experts offer pointers to maximizing the resale value of off-road equipment, including:
When fleets remarket vehicles, they earn precious dollars that can help offset the cost of purchasing new units. The same is true for off-road equipment. By opting to remarket used "yellow metal" over disposal, fleet managers can see higher resale value than they might expect. Remarketing off-road equipment relies on tried-and-true remarketing techniques, but also calls for a few of its own best practices.
Five fleet managers for city, county, and state fleets shared their own practices and offered advice for maximizing resale value.
Choose the Right Time to Remarket
First things first: Finding the right time to part with off-road equipment is an important part of launching the remarketing process. Gary Lykins, fleet manager for the Town of Jonesborough, Tenn., explained that the urge to keep a depreciated unit around for parts can be tempting - and pressure to keep it around for a spare can be overwhelming. However, Lykins said a well-planned replacement schedule is a fleet manager's best bet.
"Remarketing keeps the river of yellow metal flowing through the economy," Lykins said. "When an organization purchases a piece of equipment, the clock is running; rather, many clocks are running. The asset is depreciating, the technology is getting better on the newer models, and the productivity 'up-time' is declining on the asset you own. The accepted optimum replacement schedule is at the mark when depreciation and repair costs intersect."
Lykins suggested fleet managers set a replacement schedule, then stick to their guns. Finding the right time to remarket can make the best use of equipment - and the public's dollars.
Determine the Right Price
Once you've made the decision to remarket off-road equipment, it's a good idea to estimate the value you'd like to get out of it. This will help determine the appropriate avenue for remarketing the unit, as well as set expectations for the value you'll get.
Allen Mitchell, CPFP, fleet manager for Snohomish County, Wash., researches equipment values online and locally before attempting to remarket his equipment. "We determine values through online resources and monitor bidding online to ensure we are getting the values we think are appropriate. If we aren't able to obtain a current value, we'll call some local dealers or our auction vendors for an estimate," he said.
Invest a Little, But Not Too Much
Part of what makes an asset attractive for sale is presentation, which relies on the work put into making the piece presentable before it goes up for sale.
In preparing equipment for resale, Lykins suggested putting in a little effort beforehand - but not so much that you reduce the overall value of the sale.
"Don't go overboard," he said. "The reason you are getting rid of the asset is because the cost of keeping it up has outweighed the benefit of having it around. Chances are, you have spent way too much on the asset already. Just simply budget a couple hours of shop time to fix some of the little things and give it a good cleaning."
J.D. Schulte, fleet manager, City of Moline, Ill., relies on in-house resources to prep off-road equipment for resale. "We take the time to 'spruce' it up," he said. "We use light-duty [equipment] employees from other departments when they are available to clean and detail our vehicles and equipment. With the City of Moline having nearly 400 full-time employees, there is a good chance that someone is on a light-duty return-to-work status that can help us with detailing."
To make assets ready for sale, Curt Cole, business manager, maintenance and operations for the Delaware Department of Transportation (DOT), launched a "startup day," with mechanics on hand to help get equipment running. "The startup day helped quite a bit; people could see the equipment was running, and we corrected minor problems. We also pre-inspect our equipment to ensure that any damage or theft of items (batteries, tires, etc.) can be corrected," he said.
Find the Right Auction Service
Once equipment is ready for resale, finding the right outlet for the sale is a critical choice. For live auctions, it's important to make sure it fits your equipment and pricing needs.
"Some auction services have no minimum bid. One needs to be selective and purposeful in using that type of resource, otherwise some equipment can be sold for too little value," said Mitchell of Snohomish County.
Mitchell suggested tailoring the auction service to the equipment being sold. "Don't assume one size fits all - different equipment may require a different marketing approach or researching the right customers," he said. "I find it more efficient to select professional service providers (auctioneers) who have all of the tools to market our equipment in the optimal way and to the broadest spectrum."
Take Advantage of Online Auctions
Perhaps the biggest trend - and the most commonly suggested best practice - for remarketing used yellow metal is taking full advantage of online auctions.
For one, online auctions reach a much wider audience, which can be critical, especially when selling highly specialized equipment. Appealing to a wider audience can also make for much higher resale values.
"Last year we sold some obsolete (no longer manufactured) and high-engine-hour used sweepers for approximately $45,000 a piece," said Mitchell. "We also doubled our price of police motorcycles through the world wide web."
Schulte of Moline shared a similar success story. "One of the most remarkable returns was on a John Deere model #401 tractor that we sold nearly five years ago. The City originally purchased it for $6,748 in 1981," he said. "The department had changed its operation and needed a front-wheel assist tractor as a replacement for this unit. We marketed the 25-year-old unit on eBay with a video of the loader operating and the three-point hitch functioning properly. When the auction closed, the tractor sold for $9,400 - more than $2,600 higher than what the City had paid 25 years prior."
Although many online auctions sell units within the U.S., appealing to a global audience can also boost sales. Mitchell, for one, added a worldwide auction to increase exposure. "We have found this to be very lucrative, especially with certain specialized and construction equipment, as a result of the demand created by international disasters that have occurred in recent years," he said.
In addition to expanding the potential audience and increasing resale prices, online auctions can help avoid many of the costs associated with live auctions.
"While on-site live auctions were the standard for years, it had its limitations. The Saturday auction days were very expensive to host; hidden costs such as overtime, administration costs, transporting equipment to the auction site, and security risks played a part in our decision to go to the online auctions," Lykins of Jonesborough said. "In addition to expense, bad weather is apt to play a detrimental role at a live auction. During the best live auctions, we may have 30 potential bidders on the equipment; the online auctions offer hundreds, or at times thousands, of potential bidders. Online auctions have drastically reduced the expense of surplus asset disposal. The percentage of the sale is a fixed amount and very few hidden costs are associated."
For Tom Monarco, fleet manager, City of Colorado Springs, Colo., online auctions have eliminated restrictions on when units can be sold and done away with transportation costs. "We used to go through big auction companies such as Ritchie Brothers or vehicle auction companies," Monarco said. "We decided to use Public Surplus or eBay because of not having the additional cost of hauling the equipment to the auction sites. We do not have to wait till the auction companies have their sales; we can sell anytime."
While online auctions have some very apparent benefits, it's important for fleet managers to remember that they don't run themselves - they require attention in order to get results.
"Online auctions are a fleet manager's dream. But it's important to be involved, stay on top of the process, and be flexible; you are the decision-maker on a lot of the details of the process. Get your organization the best deal possible," Lykins said.
Schulte also offers a third option: combining live auctions with an online component. "We use the Internet in some fashion for all our auctions, even when we have a local auctioneer," he said. "For example, we post videos online for the equipment that we are disposing so the local auctioneer can promote the item prior to the sale to potential bidders outside the local area. We have also used live auctions that allow Internet bidding simultaneously for our specialty items to broaden the scope of the audience."
Tailor Sales Pitch to the Online Environment
With online auctions gaining popularity, it's critical for fleet managers who rely on them to also know the needs of marketing to these unique audiences. The sales pitch is simply not the same as it is in a live auction. The buyer can't hear the engine run, walk around the vehicle, or accurately assess the condition. Photography and video can help.
Lykins of Jonesborough offered valuable advice when approaching the photo and video task. "When photographing the equipment for online auctions, look at advertisements for new equipment. Pay attention to the camera angles in the glossy new ads and notice that most yellow metal ads have action: the loaders are loading, the rollers are rolling, and the trenchers are trenching," Lykins said. "Most online auction sites have video available. Recruit an operator who is familiar with the asset and make a five-minute video of the asset. Show the unit doing its job, let the bidder hear the engine, and get footage of all the attachments. If the online auction site does not feature video, link your video via any popular video-sharing program on the Web."
Using appealing photos and accurate video helped Lykins and the Town of Jonesborough see major remarketing success. The Town's first taste of online auctions was with police-seized vehicles. It was such a success that the method of online auctions of the surplus equipment was quickly approved by Town leadership. Using both video and still photography of a new Holland 555 backhoe, the Town recently fetched a $9,400 price tag at auction - even though previous auctions of a similar backhoe only brought $6,500.
A similar approach has yielded improved results for Monarco and the City of Colorado Springs, too. Video of a running engine and photos of the equipment while running have increased unit resale values by 10-12 percent.
When using the Internet to remarket, Schulte of Moline put it best: "The unknown is a huge obstacle with online auctions. If a potential bidder can hear an engine, or see an item operate, it takes a lot of the uncertainty out of his or her decision to bid. Give your potential bidders every opportunity to 'feel' the unit even if they are 1,000 miles away," he said.
Be the Buyer & Be Honest
Knowing your market is key. Who will likely buy this equipment? What will they want out of it? Putting yourself in the shoes of your buyer can help you take action to truly appeal to their needs - and their purchasing sensibilities. Cole of Delaware DOT put it simply: "Get in contact with the customer base that uses this equipment and you get better pricing."
Being the buyer starts with an accurate and detailed description of the equipment. "Above all, be honest and accurately represent the condition of the equipment. Condition is subjective, and expectations are shaped by your description of the equipment," Lykins of Jonesborough suggested. "Don't give opinion in the description; stick to the facts. Try to imagine a prospective market for the surplus asset: a logging company, a farmer, a tree removal service, perhaps. Then decide, 'What does a prospective buyer want to know?' "
Schulte of Moline agreed, and recommended paying attention to which extras to include, particularly with off-road equipment. "Knowing what is important to the next owner is key. Including all the service and parts manuals with the auctions seem to make a difference," he said. "Equipment can be very unique and require special tools, procedures, and parts to keep them maintained (unlike cars and trucks) so the manuals can make a huge difference to the next owner."
Once you've appealed to the particular sense of your buyers, Lykins suggested inviting them to see the equipment as the final hook to make a sale. "Inviting potential bidders to view the equipment during the auction period helps get a bidder invested," he said. "If a bidder is willing to come down and view the asset during an online auction, that means he or she has invested some time and energy into the purchase and usually means that person will be one of the final bidders."
When having bidders on-site, Cole recommended having maintenance records available for inspection, too, as well as having the equipment section on hand to talk to prospective buyers about the condition of the equipment. "We typically maintain equipment well over its life to have it perform when needed. Showing our maintenance records demonstrates our care for the equipment."
Avoid Pitfalls Unique to 'Yellow Metal'
While many traditional remarketing techniques apply to off-road equipment, Lykins of Jonesborough and Schulte of Moline offer a few pitfalls to avoid that are unique to these assets.
For instance, unlike typical fleet units, used "yellow metal" buyers will have a greater interest in the accessories - and that means those should be highlighted in the resale process. "Unlike cars that are usually used for transportation, nearly all equipment is doing some type of 'work' for the owner," Schulte. "PTO-driven accessories, functioning attachments, etc., are important to the next potential owner."
Documentation can also be a key component requiring a little extra attention. "Yellow metal traditionally does not have a title, so be sure to document everything from the authority that sent the asset to surplus, to the serial number and engine numbers, all the way to the check number of the purchaser," Lykins advised.
Mastering the Art
While many methods of remarketing have proven results, ultimately the success of the task is up to the fleet manager. Tailoring remarketing to the specific type of equipment, the right market, and budgetary considerations are key to successful remarketing of off-road equipment.
"Like so much else in fleet, there are no pat answers to equipment disposal," Mitchell of Snohomish County said. "Obviously we would always like to buy the equipment for the lowest cost and sell it at the highest price at the end of its economic life. I think it is at least as much art as science."
SIDEBAR: The Best Practices Panel
Gary Lykins, fleet manager for the Town of Jonesborough, Tenn., remarkets all of his surplus rolling assets. He relies on the www.GovDeals.com online auction website.
Allen Mitchell, CPFP, fleet manager at Snohomish County, Wash., primarily uses two auction services to remarket a broad scope of equipment ranging from motorized tools, to attachments, to construction equipment, to over-the-road trucks. The County also occasionally includes trade-in clauses with its truck and equipment bids and sells to local municipalities when there's an interest.
J.D. Schulte, fleet manager, City of Moline, Ill., sells nearly all of the City's surplus items on eBay or through Public Surplus, but also supplements local live auctions when they are used by using YouTube to post promotional videos prior to the auction. In some cases, the City has used live auctions that allow simultaneous Internet bidding.
Curt Cole, business manager, maintenance and operations for Delaware Department of Transportation (DOT), remarkets off-road equipment that is small in nature, such as mowing, loading, and some construction equipment. Most of it is sold at auction and occasionally online.
Tom Monarco, fleet manager, City of Colorado Springs, Colo., sells all of the City's off-road equipment, which includes loaders, backhoes, dozers, etc., through Public Surplus or eBay.
- Curt Cole, business manager, maintenance and operations, Delaware Department of Transportation.
- Gary Lykins, fleetmanager, Town of Jonesborough, Tenn.
- Allen Mitchell, CPFP, fleet manager, Snohomish County, Wash.
- Tom Monarco, fleet manager, City of Colorado Springs, Colo.
- J.D. Schulte, fleet manager, City of Moline, Ill.