When is the best time to sell rental equipment?

Companies should consider different factors such as tax benefits, accounting needs, storage space and cash flow when determining the timing of a fleet sale.

The end of the year means that now is usually the ideal time to sell the used machinery in your inventory. It notes that selling machinery within this time frame can help industrial companies:

1. Lower the tax burden and open up targeted deductions; Establish a clear foundation for investment planning in the new financial year by strategically allocating profits and losses and optimizing expenditures;

2. Release capital and reduce inventory, simplify balance sheet, improve liquidity, and provide a solid financial foundation for year-end settlement;

3. To make room for modernization and production adjustments in the coming year;

4. Secure a new investment budget for next year;

5. Taking advantage of the high demand at the end of the year, many companies want to invest their remaining budgets and are more inclined to buy used machinery rather than new equipment for immediate use.

Factors such as the market cycle, equipment brand, model, usage, and type of work all affect the auction value and have an impact on the timing of the equipment sale. Leasing companies should find "sweet times" to sell equipment by balancing resale value with depreciation. It noted that leasing companies sometimes may not be able to charge high prices for newer equipment. "When the market is booming, high demand and rising prices enable businesses to sell just-used equipment at close to the original cost, especially those premium brands with high global demand," it said, "For example, rising costs in 2021-2023 led buyers to pay significantly higher prices for new equipment." This allows the fleet to be updated quickly and keeps the age of the equipment low." "But in 2023-2024, as demand slows and supply increases, prices of used equipment fall, leading to heavy depreciation of equipment that is only 1-2 years old." It said. In this case, keeping the equipment for 3-5 years until depreciation is more manageable is often more cost-effective than selling it early. Maintenance costs now play a key role in timing the sale. Equipment with a high frequency of use may need to be replaced earlier in harsh environments, while equipment with a low frequency of use will retain its value better. According to the analysis, in current market conditions, holding leased equipment for 3-5 years usually provides the best resale value.