The equipment industry we serve is currently facing a multitude of challenges and uncertainties. Current supply-chain issues and policy changes on the horizon will affect equipment purchases, and businesses are looking for answers during these events. As a partner to our customers, we believe in full transparency, letting you know what we are seeing from our perspective and what you can expect in the future when planning and purchasing equipment for your fleet.
Upcoming Emission Regulations
There are two waves of upcoming emission regulations that will have a direct impact on the cost and availability of equipment.
The 2024 emission guidelines mandate a 50% reduction in particulate matter emissions from new heavy-equipment engines. New diesel engines cannot exceed a 30% opacity limit for diesel particulate matter, and new engines must have zero evaporative emissions. This policy will be challenging for the heavy-equipment industry, as companies will see increased maintenance costs and downtime with equipment as companies comply with the policy, fuel economy reductions, and less equipment longevity. The industry can expect to see increased equipment costs, especially in Classes 6, 7, and 8. As many companies are hesitant to purchase 1st generation equipment under the new policies; demand is expected to increase over time as equipment shortages continue into 2023.
California emission policies are more stringent, requiring all vehicles sold have zero emissions and that all cars registered after 2025 must be electric. The state has also banned non-electric vehicles from being sold in California starting in 2030, which means that residents will only be able to purchase EVs or traditional hybrids.
Many companies, in order to avoid having to stock their fleets with first-generation 2024 models, will buy equipment in greater quantities in 2023. This buying activity will add to the already existing demand for equipment purchases.
The second phase of emission policy changes are proposed for 2027, which will require additional upgrades to heavy equipment. The timing of these changes will provide more challenges to the industry, as some engine manufacturers may struggle to produce products that are compliant, potentially resulting in a reduction of engine suppliers, causing supply chain constraints. The industry will continue to experience increased costs and equipment downtime.
Introduction of Electric Powered Equipment
In response to pending emission regulations, some equipment manufacturers are introducing electric-powered units. These vehicles provide better ESG scores than diesel equipment, but several issues must be considered before making the decision to add them into a fleet. On average, an electric unit costs 2 to 2.5 times the amount of its diesel counterpart. The infrastructure for recharging these vehicles is not in place, which means that they cannot travel as far as diesel units and cost more to operate. Until charging stations are available at locations where these vehicles are typically deployed—for example, transmission-line construction sites or hurricane-ravaged areas—they may be less reliable than diesel models.
A more effective solution is to offer an electronic PTO that allows the diesel engine to charge the PTO while providing electric-powered functionality when needed. This combination is EV compliant, offers fuel savings, and still provides the reliability of a diesel engine when working in areas without power.
Surcharges Due to Supply-Chain Issues
The chassis manufacturing industry continues to face supply-chain challenges, and it is unclear when relief will come. In response, manufacturers are implementing higher surcharges on chassis, which have led to overall increases in equipment prices.
Why Buy Now?
Inflationary pressures, along with factors such as supply chain disruptions and fluctuating fuel prices, are affecting our industry today in ways that could affect equipment availability and pricing in the years ahead. Companies that buy now will be better positioned to align their fleets with their business goals.
The vocational industry has been underserved for almost 4 years and is expected to continue due to supply chain issues. As part of this, there will be a shortage of vocational trucks for years to come. Manufacturers have not been able to keep up with the needs of the vocational industry since 2020. Still, fleets are aging and phasing out in the interim and need to be addressed regardless of the economy. We can help you with your new and used needs, we also have the unique ability to refurbish and/or remanufacture your equipment to extend the lifecycle. We have a knowledgeable team, fully aware of current market dynamics and ready to partner with you to ensure that your business can meet demands for upcoming projects. Let us help you navigate these challenges, whether it be a new or pre-owned equipment for purchase or rent.