The used equipment market in 2023: Secure in unsure financial instances

In 2023, the European financial system was impacted by excessive power costs and inflation. Rate of interest hikes by the ECB and common financial uncertainty additional dampened funding readiness. However, the commerce in used equipment remained steady. The explanations for this are manifold.

2023 was the yr after the turning level. The conflict in Ukraine entered its second yr and has turn into a relentless think about international consciousness. Though there are additional conflicts worldwide, such because the latest confrontations in Israel and Gaza, it’s nonetheless the conflict in Ukraine that impacts the financial system in Europe. Excessive power costs and inflation additionally triggered deep uncertainty within the markets this yr.

But amidst these international challenges, one market phase proved remarkably resilient: the commerce in used equipment. “This sector has been significantly booming because the Corona pandemic,” says Ghislaine Duijmelings, one of many managing administrators at Surplex. “On our platform, we carried out virtually 10% extra auctions with used equipment in comparison with the earlier yr and accordingly offered extra machines and tools. The explanations for this in 2023 have been manifold, however above all, our steady costs performed a task regardless of excessive power prices and inflation.”

The power yr of 2023

The yr 2023 was marked by the power transition – initially determined upon by the European Inexperienced Deal in 2019 and drastically accelerated by the conflict in Ukraine. On the flip of the yr, excessive power costs and issues about power shortages prevailed. European governments responded with subsidies, tax cuts, and market-stabilising reforms. Thus, the height of power costs was already overcome by the top of 2022. The development of falling costs continued in 2023. Nevertheless, the excessive worth degree remained a problem for each customers and the trade. However, the forecasts are optimistic: a big easing is anticipated for the yr 2024.

“The affect of power costs was additionally mirrored in our buyer surveys,” explains Duijmelings. “Initially of 2023, virtually a 3rd of our prospects cited excessive power costs as the largest burden on their companies. A shift in priorities grew to become obvious in the summertime: in a subsequent survey, excessive power costs dropped to 3rd place, whereas the scarcity of expert staff and inflation have been perceived as extra urgent points.”

Secure costs within the used equipment market regardless of excessive inflation

Relating to inflation, it seems that essentially the most difficult interval has handed, since inflation in 2022/23 was primarily attributable to excessive power costs. After peaking in October 2022, the inflation fee within the European Union has seen a gentle decline, presently at 3.6% (as of October). The Eurozone is faring even higher, with an inflation fee of simply 2.4% in November.

Duijmelings states, “In 2023, used machines have been barely affected by rising prices. On, the typical worth enhance from the earlier yr was simply 0.5%.” This modest enhance is in stark distinction to the inflation-induced worth hikes on many different merchandise. The worth of a used machine primarily depends upon components comparable to its kind, producer, age, demand, and availability. In distinction, costs for brand spanking new machines are primarily influenced by the elevated prices of supplies and power.

The financial system in 2023: Development or recession?

To counteract excessive inflation, the European Central Financial institution (ECB) incrementally raised the important thing rate of interest all through 2023. Elevated capital prices dampened the willingness to take a position. Those that nonetheless invested did so with a concentrate on value effectivity. This development benefitted the used equipment market, as used machines are extra inexpensive than shopping for new ones.

One other piece of excellent information in 2023: the COVID-19 pandemic was formally declared over. On 5 Might 2023, the World Well being Organisation (WHO) lifted the worldwide well being emergency declared on 30 January 2020 – 1,251 days after the primary confirmed case of COVID-19. Whereas the pandemic primarily disrupted provide chains, provide shortages are not prevalent. The height was on the finish of 2021 when over 80% of firms reported difficulties with supplies. Now, just one in six companies within the manufacturing sector stories supply points. Thus, in 2023, firms have been in a position to steadily work by full order books.

Nevertheless, the mixture of restricted investments and declining order books is having a unfavorable affect on manufacturing and turnover. General, the EU Fee expects a GDP progress of 0.8% for the Eurozone this yr. Germany, probably the one main industrial nation, is predicted to expertise a recession with an financial contraction of 0.4%.

Outlook for 2024: safety boosts the financial system

Backed by rising personal consumption, growing wages, and a steady job market, a big enchancment within the financial scenario is anticipated in 2024. That is additionally mirrored in Surplex’s buyer surveys: At first of the yr, firms confirmed solely tentative willingness to spend money on equipment. Nevertheless, in response to the most recent survey, they’re now extra prone to enhance their investments on this space. This shift signifies rising confidence in financial stability.

However, a slight enhance in insolvencies is forecasted for 2024, significantly affecting smaller companies and the development trade. Nevertheless, a surge in insolvencies at an economically regarding degree is just not anticipated. The present enhance is seen extra as a normalisation following the top of state help. Concluding, Ghislaine Duijmelings notes: “Extra insolvencies in 2024 imply a bigger collection of machines and tools within the used market. This might result in barely decrease closing costs, providing our prospects further engaging funding alternatives and holding the market dynamic.”