Leveraging market conditions to maximise returns on industry equipment is becoming the norm for businesses across Australia.
After 12 months of arguably the most fortuitous market conditions in Australian history, the 21/22 financial year ended with a bang. Industrial equipment sales had been consistently achieving new records and there was no slowing down in sight. Highly successful sales were now the norm, even while businesses continued to regain capital on their used or decommissioned items.
Remarketing services, too, saw an influx of growth in FY 21/22. Australian businesses still recovering from the repercussions of the COVID-19 pandemic used Pickles’ remarketing services to retain fleets of assets now valued much higher than they had been previously.
The interest in the Australian earthmoving and construction industry sparks a new conversation about consistency of the market. Will this demand for Australian assets continue? Or will this bubble burst?
The Asset Bubble
Predictions on what the market can look forward to next are varied between forecasters, particularly surrounding large items. The backlog of orders that has transpired due the pandemic suggests that this high demand for assets can only extend for as long as the shortages remain. The reality, however, is that the delays are likely to roll well into FY 22/23, and possibly the year or years that follow.
Manufacturers across the globe continue to push back expected delivery times of assets due to raw material shortages, production delays and international shipping issues. While the Australian asset bubble remains contingent on new shipments, there is often no telling when these orders might arrive. On top of that, as new waves and mutations of COVID wash over societies across the world, new issues – such as extensive staff shortages – make for further delays. With no clear end to this new normal in sight, manufacturers continue to snowball through cycles of orders and delays. Consequently, Australian items continue to permeate the market thanks to their accessibility.
While the bubble is expected to deflate once the influx of new assets finally reaches Australian shores, it will likely take several years for the market to level out. When this happens, the price of assets will likely level out, but the market is only expected to grow in years to come. Market information from Mordor Intelligence suggests that machinery digitisation and emission-focused production will only drive up the industry.
Some experts have expressed concerns about the market swinging drastically in the other direction once this leveling begins, and this could effectively reduce the worth of used assets substantially and start a cycle of low returns until the market plateaus. These market downturns, however, are not a given. If they do occur, they are not predicted to affect Australian businesses for another couple of years. This does leave businesses with a potential deadline for offloading assets while asset values are still at record highs.
The Strength of the Market
The last calendar year has provided optimum opportunities for businesses looking to capitalise on remarketing services for their used or decommissioned assets. A large number of industrial and construction companies took advantage of the well-timed opportunities to close up businesses and move on comfortably. Other businesses were simply forced to transition into closure, as liquidation became the only viable process to recoup capital. Regardless of the circumstances, a large pool of Australian businesses came to rely on Pickles’ valuations and remarketing services as a way to circumvent loss of cash flow or asset value retention. It can be challenging to fully understand the true value of company assets, so these services extend a helping hand to businesses in need to obtain the highest possible value for their used assets.
Pickles hosted a large number of successful sales for businesses across Australia, with the Norris Group Liquidation Auction one of the most successful sales across the board. Thousands of assets were sold over multiple events over the month of May with a total of over $22.5M in sales obtained for the Norris Group. All parties involved were exceedingly happy with the result.
The Norris Group Liquidation Auction consisted of 12 live and online auctions to showcase the volume and quality of the equipment on offer. The sale event featured trucks, trailers, vehicles, earthmoving and waste equipment, and a range of smaller parts and accessories. The most successful asset class was earthmoving and waste, where large, niche assets received $13.7M in total sales. Of the assets taken to market, 96% were sold during the auctions, with the recouped monies used by liquidators to work with financiers and creditors on behalf of the Norris Group. While it was the smallest earning class of the auctions, parts and accessories fetched $2.3M in sales. This success highlighted the need for all types of assets in the current market.
The marketing campaign that preceded the sale event was highly successful in attracting the right clientele. All up, $2.2M+ impressions, 200K+ page views, and 43K users on the event landing page were recorded, which indicated that there was a lot of interest. A proactive marketing approach, national anticipation, and the amount and quality of assets on offer all contributed to the high interest, and consequently the supreme sales results.
How Businesses Leverage Market Conditions
Australian business owners are capitalising on the current booming market to offload assets for optimum prices. The outlook for Australia’s industrial market in 2022 looks strong, and decision-makers are jumping in to access liquidity or to wrap-up their business offerings while the market is hot.
Although international production is kicking back into gear, it’s predicted that it will still take a number of years for the market to level out. At the same time, infrastructure development will continue to drive the demand in the sector, and used assets are predicted to continue to sell at premium prices.
For businesses navigating this new normal, Pickles’ valuations and remarketing services offer a way to start new – to leverage assets, to recuperate capital – to start afresh, or retire to a new way of living. Whatever the reasons behind a fleet sale, Pickles will get you on the right path.
21 Jul