How important is a brand name in the single drum compactor market? Millions of dollars in advertising, marketing, and brand awareness are spent each year by major OEMs in this space, and they’re mostly geared towards the sale of new equipment. On the secondary market, the impact of the manufacturer on the fair market value can be harder to determine. At MagikMe Equipment, we have developed a metric, known as the brand premium, to better understand this topic.
In this article, our brand premiums are based off of the past 13 months of average asking prices on the resale channel for wheel tractors within each brand. Average asking prices across all seven brands are used as our baseline. The graphs within this article were created by isolating the impact of brand name by holding remaining factors such as region and age constant across more than 87,000 single drum compactor observations. The brand premium is the variance percentage from the average asking price for all single drum compactor brands in our market data. We chose these seven brands because they make up over 86% of the used market for single drum compactors. Brand premiums are important to understand because they provide insight as to which brands have the highest perceived value.
Among the seven brands of single drum compactors, Caterpillar had the highest overall brand premium at the end of December, while Case had the lowest brand premium of the seven brands in this graph.
As can be seen in the brand premium graph, Caterpillar had by far the highest brand premiums during the entire 13-month period, with Volvo being the second highest. The remaining five brands, in order from highest to lowest brand premium, are Sakai, Bomag, Dynapac, Hamm, and Case. Only one of the seven brands, Dynapac, had an overall decrease in brand premium over the past 13 months, and it was less than a 2% decrease. The largest increases in brand premium since December of 2016 were Sakai (5.80%) and Volvo (5.36%).
In terms of popularity among the five brands, Caterpillar is clearly the most popular with 40.4% of the overall market share, while Bomag is in second at 14.2% of the market. The rest of the brands, in order of market popularity, are Dynapac, Volvo, Hamm, Sakai, and Case. In terms of average prices, Caterpillar had by far the highest average asking price with Volvo being the second highest by a slim margin over Case; Dynapac had the lowest average asking price with Bomag just ahead of them.
These pieces of equipment are used in a very specific setting, to compact and move dirt when building or repairing roads. Single drum compactors are not to be confused with the tandem drum compactors, which are used afterwards to compact the asphalt or concrete. Single drum compactors vary greatly in terms of the drum width and the operating weight of the equipment. Drum widths range from 36” to 84” and operating weights ranging from 2,500 lbs. to about 55,000 lbs. With the anticipation of increases in public infrastructure spending in the next couple years, especially with roads and highways, single drum compactors could be in high demand.
The brand with the highest overall average age in the graph below is Caterpillar and the brand with the lowest overall average age is Volvo.
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Average age is important to understand because it details which brands are staying on the market the longest. When looking at the age graph, we can see that the seven brands have average age ranges between 5.8 and 10.3 years as of December of 2017. Caterpillar has the highest average age as of December of 2017, with Bomag and Dynapac being almost the same. Sakai and Hamm have average ages around eight years and Case and Volvo have the lowest average ages throughout this 13-month period, ending at about six years in December of 2017.
