Too often contractors will overlook the potential value of the machine after its useful life in their operation is over. In addition, as more contractors use leasing as an acquisition strategy, resale value becomes a more important component in the purchase decision.

Underground business manager with Vermeer Jon Heinen said “More customers are gravitating to a lease when acquiring underground equipment. The higher the residual value on the drill you plan to purchase, the lower your monthly payments. This can have a major impact on a customer’s business.”

Based on this trend, Vermeer has spent considerable time researching industry resale values and the impact they can have on the purchase decision. Vermeer said cost of ownership is also becoming a large part of the equation for customers, whether it’s a three-year lease or extends for ten years.

Resale value is going to be more important for a contractor who turns its equipment over every three to five years compared to one who may utilise the drill rig for ten years. However, resale value should still be a component of the purchase decision for the contractor holding its equipment longer, as that piece of equipment may be worth a certain percentage more than a competitive unit and that translates into better trade-in value.

What affects resale value?

Mr Heinen says that a number of factors can influence the resale value of a drill.

“Manufacturing, quality control and dealer support have a significant influence on the resale value of a drill rig.

“A robust physical steel structure and undercarriage are the foundation of the drill and have a significant impact on the structural integrity of the machine long term.”

Quality control is another factor that ties into resale value, as does the condition of the rod. Drill rods are a major investment and play an important role in the value of the drill. New game in town

So, how do you get the most value for your directional drill? There are more outlets today where you can sell your equipment, but the pros and cons of each need to be understood.

“Dealer trade are still the major outlet for used directional drills,” says Mr Heinen, “however, we are seeing a definite trend towards auction houses and online auctions.”

Auction houses, such as Ritchie Bros., typically hold their auctions at a physical site where the equipment is organised and prepped. Prospective buyers are encouraged to test and inspect the equipment prior to the auction date.

Another option is to consign the directional drill to an online auction site. The equipment is marketed to prospective buyers around the world. On auction day, the equipment is featured for three to six minutes for potential buyers to bid. Once the equipment is sold, the auction company handles the payment process and the buyer arranges for transportation.

The local dealer may also know of other customers who could be interested in the unit. Better yet, some manufacturers offer a system that allows dealers to market the older unit to the manufacturer’s global dealer network, further expanding exposure for the directional drill.

What to consider

“I encourage customers to use the Internet and research the value of their drill. You can go to a number of online auction websites, search by model number and year to get an idea of what you can expect to receive in a trade or outright sale. But getting the best resale value still goes back to the original purchase,” says Mr Heinen.

“It’s important to invest time upfront researching the difference in resale value between different brands and incorporate this information in your buying decision. The extra work could mean a lot to your bottom line.”