By Paul Posel
At a time when tree-care equipment dealers are reporting increased inventories of used chippers, contractors should consider the potential resale value of their machine. To receive the best return on your investment in a chipper, plan ahead for the day you sell or trade it and, by all means, take care of the unit.
When purchasing a chipper, pay attention to the factors that can impact the resale value. For example, look for a strong, well-built product that can easily handle material without putting undue stress on the machine. Enhanced safety features, local dealer support, and readily available parts are important considerations.
“At the time you buy a new chipper you should be thinking about the features that will help you sell it in the future,” said Stu Senska, sales manager with Vermeer Midwest in Aurora, Ill. “For example, our optional winch, which allows the operator to move heavy logs, will cost you initially. However, at trade-in time you may receive 20 to 30 percent more for your chipper than one without a winch.”
The general overall condition of a used chipper is the first thing dealers evaluate.
“The appearance of the chipper is going to affect what people think about its value,” said Rick Shepherd, service manager for Vermeer Pacific in Fontana, Calif. “If the machine looks good and clean, the perception is that it has been well taken care of. If it is dented and dirty, a red flag will go up. That’s even before we take a close look at areas where maintenance may have been neglected, such as bearings and hoses.”
Most used chippers have a trade-in or resale value. However, a well-maintained machine will generate more value when you sell or trade. Taking proper care of your chipper is a process that should begin the day you purchase your new unit.
“Oftentimes a customer will think his machine is worth close to what he originally paid for it,” said Shepherd. “Then we start going down the list of things that need to be repaired to make the machine salable and you see a surprised look on the customer’s face.”
Many times the owner may not realize something is worn. At trade-in time the dealer will discover those items that require repair or replacement, and it will affect the trade and resale value of the chipper.
Daily maintenance items, such as lubrication of the bearings, clutch adjustment, checking the air cleaner, go a long way toward helping to receive a higher resale value. If not checked, they can turn into a costly situation. Take the air cleaner, for example.
“Although the chipper still may be running, an air cleaner that is completely plugged could be pulling a lot of vacuum that has the potential to cause damage to the engine and/or the turbocharger,” said Shepherd. “In either case, overlooking normal air cleaner maintenance can result in costly repairs.”
In a typical dealership the service department will evaluate used equipment and provide a list of repair costs to the sales department. “A machine in poor condition can have a limited trade value,” said Shepherd. “In some cases, a machine may require a major repair and the dealership may not be able to make the deal work.”
There is not necessarily a correlation between the age of a chipper and its condition. Some machines that have 4,000 to 5,000 hours are in real good shape, while others with 1,000 hours are falling apart. It all depends on the original quality of the chipper and how the owner takes care of his equipment. And there are some situations where repair is not an option, which means the machine will be rejected at trade-in time.
Equipment dealers should make sure all safety components are functioning properly before selling a chipper received on a trade.
“It could be a small, inexpensive item such as replacing safety decals,” said Shepherd. “Or it could be an expensive brake job or rewiring a chipper component. The value of any chipper that comes in with safety issues is going to be adjusted so the costs of those repairs are covered.”
A used chipper is worth more if the owner has a good set of maintenance records. If the machine has been serviced by the dealer, the maintenance history will be readily available. Otherwise, keeping records such as oil changes, similar to what you would do for an automobile, can be valuable as well.
“Maintenance records help the dealer resell the chipper because it gives the prospective buyer a higher level of confidence that the machine has been properly cared for,” said Shepherd.
According to Shepherd, regular maintenance will take care of most of the issues that lower the resale value. His advice: Follow the maintenance manual in regard to the recommended service schedule, and repair things as you go along instead of waiting until trade-in time.
“Some chipper owners won’t even think about repairs until something breaks; others stay on a regular preventive maintenance schedule,” said Senska. “Neglect the machine and it will definitely come back to haunt you. Take care of it and your chipper is going to be in better shape and so will your pocketbook when it is time to sell or trade.”
Trade and resale options
So how do you get the most value for your chipper? There are more outlets today where you can sell your equipment, but you need to understand the pros and cons of each. Dealer trades are still the major outlet for used chippers. However, auction houses and online auctions are becoming options as well.
Auction houses typically hold their auctions at a physical site where the equipment is organized and prepped. Prospective buyers are encouraged to test and inspect the equipment prior to the auction date.
Depending on the auction house, some will parade the mobile equipment in front of the bidders so they can witness the machine in operation. It’s also important to know if the auction is reserved or unreserved. Unreserved auctions don’t allow the seller to set a minimum bid or reserve price, meaning every piece of equipment is sold to the highest bidder that day regardless of the price. Some auctions also forbid the seller from bidding on their own items. Buyers can attend the auction in person or bid using an online system.
Another option is to consign your chipper to an online auction. Rather than transporting your equipment to the auction site, the equipment remains at your location until the auction is completed and the equipment is sold. The online auction company has a team of equipment inspectors who conduct a detailed inspection of key components, photographs, selected wear-related measurements and, if appropriate, oil/fluid samples for analysis.
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.
Auctions aren’t the only way to market your equipment to a global audience. Typically, your local dealer knows of other customers who may be interested in your unit. Better yet, some manufacturers offer a system that allows dealers to market your older unit to the manufacturer’s global dealer network — further expanding exposure for your chipper. Plus they have industry expertise that an auction house or online auction lacks. Also note that if selling a used chipper to a buyer in another geographic location, various regulations and laws may apply to exporting that product, as well as operating that used equipment in the new location.
What to consider
Although there are several advantages to auctions, you need to remember that you may not get the price you were hoping to receive. In addition, the funds you receive for your chipper may be considered taxable income. With a trade-in, you’re guaranteed an amount and the trade value is not taxable.
Getting the best resale value still goes back to the original purchase. It’s important to invest time up front researching the difference in resale value between different brands and incorporate that information into your buying decision. The extra work could make a positive difference to your bottom line.
Paul Posel, is a features writer with Two Rivers Marketing. Article submitted on behalf of Vermeer Corporation, Pella, Iowa.