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Online auctions booming – Ritchie Bros

Ritchie Bros has reported that its online auctions held during the pandemic were a record-breaking success. The company experienced a substantial increases in the number of items sold, indicating a strong appetite for used machinery in the construction sector. Furthermore, Ritchie Bros said the recent high level of auction lots has been driven by the need to release capital for fleet renewals, and a change in focus for an industry that is now more driven by asset utilisation.

Ritchie Bros’ Rupert Craven gave his take on the situation: “With infrastructure and housing projects driving demand for plant and HS2, in particular, focusing on emissions and productivity, we are seeing a need for plant operators to invest in new equipment and a reduction in the average fleet renewal cycle. Also, when it comes to buyers, due to a squeeze on the availability of new equipment with factories catching up from lockdowns, there has been a surge in demand for younger equipment, which meets the emissions standards demanded by larger projects. This favorably impacts bidding activity and, therefore, the returns for articulated dump trucks, technology-enabled excavators from 20 tones and above, and other in-demand items.”

During September, Ritchie Bros noted intensified bidding activity pushes up price levels – UK equipment was 2% cheaper for overseas buyers due to changes in the pound. The auctioneer also witnessed equipment buyers embracing e-commerce amid the COVID-19 pandemic, with nearly doubling bidder registrations compared to the September 2019 auction.

Rupert Craven, who's been working in the heavy machinery industry for 20 years, has seen the mentality of the market change during the COVID-19 pandemic. “Businesses now look much harder at lifecycle costs, utilization, and equipment valuation. Particularly with the latter, more businesses are calling us to guide them through the process of fleet evaluation and disposition options that can include selling newer equipment by utilizing our data to obtain the best prices."

According to Ritchie Bros, an interesting new phenomenon is that companies in the UK and Europe ‘buy for the job’ and resell. “We have witnessed plant being bought for a 6- to 12-month job and then being resold at our Maltby auction with residuals holding up very well," Rupert said.

Where the auctions pre-COVID were attended both in-person and online, they're now only held online with an easy-to-use bidding system that is open for several days. Although born out of necessity, the online-only auction format attracted a record number of participants and generated strong returns for sellers. "What is also interesting is the change in the online bidder profile, which again has been dramatic, as more people get comfortable with doing business online. There are now many more bidders globally and a large increase in individual bidders, following the other trends we are seeing.

“What is clear is the construction and plant sector is in much better shape than most commentators predicted and in some cases with large infrastructure projects, we are even into boom times, the likes that have not been seen since the motorway building era," Rupert continued. "And of course, we can’t underestimate the continued global demand for equipment that has been well looked after by UK plant operators.”

Ritchie Bros conducts numerous auctions across the world and is currently in the final stages of a major redevelopment of its new 20-hectare site at the old Maltby Colliery, South Yorkshire, where it hosts auctions throughout the year. The auctions continue to be held online only for now, with interested buyers viewing items both on the website and the auction yard. The next Ritchie Bros auction in Maltby will be held on November 26th & 27th.

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