This is a simple question that people in the market for any equipment should ask themselves.
The challenge with most used equipment is the history is unknown, even with “service documentation”. The possibility of a specific missing occurrence in the reports that would sway your decision on a machine, for instance “by the way this machine was in an accident” or “our operators are cowboys” and our favourite “our company doesn’t use train air because it takes too long”. The other problem with the used market, especially in rail car movers, is the lack of used machines in the size and age you would like to have.
When someone is offering a great 5TM or 9TM (or similar units) at a lower cost, it is likely because:
A) It was built in or prior to the 70’s and has been depreciated by more than one company over it’s potentially 40+ years.
B) It is costing our company too much to maintain, let’s offload it and buy something newer.
C) We have outgrown this machine and our operators would like to have the newer machines with the standard features like train air for safety.
D) We like the machine size, but man it is going to cost $100K plus to rebuild it. And we still have the old machine.
We find that several online broker style companies are selling these old machines for a premium even offering some warranties. There are lots of “rebuilt” or “re-manufactured” machines, but who did the work, and was it really a good machine to spend that money on in the first place? It is just a good paint job? Who is offering the warranty and how do you know it will be honoured?
We have lots of customers who ask for a used machine but then comment:
– There is nothing in my budget so I will settle for a $40,000 to $80,000 machine and hope I get my money’s worth.
– Can you give me a warranty on that used machine, what happens when it goes down?
– Our factory is growing so we need a bigger unit, but we don’t want to increase our operation cost.
Some Other questions you can ask are:
1) Why are you not looking at a new machine with a lease or even lease maintained package? Sure a new machine can push the $300,000 or up to $400,000 mark, but you can lease it off the books, over several years, and knowing there is a limited used market the machine will maintain its value. To support this theory, look for anything in the 2005 and newer age bracket online, and I expect you might find some scarce lease returns. But look at their values, and remind yourself this machine is only 5-6 years old, and in comparison it has quite low hours, and it probably only had one previous owner.
2) How can I be sure my purchase is a Good deal (avoid Cognitive Dissonance)? -The new machines have true warranties from the manufacturer, in which the machine will have near zero hours on it when you get it and can keep true records of your maintenance and repairs. With warranty your operation costs are lower, and there are far less unexpected repair bills. We also find that clients with new machines the operators typically respect them, especially when they are moved out of the real old machines.
3) Is my new machine purchase going to SAVE money for the company? With a much lower operating cost and minimal repairs for the first few years, the fixed payments are much easier to manage than buying that $80,000 machine and still repairing it for $15,000 to $20,000 per year on top of the budgeted maintenance.