Key Takeaways for Decision Makers
BUYER/SELLER: Don’t underestimate the importance of model year verification when assessing a potential equipment purchase
How often are model years misrepresented in the used equipment market? We applied our Serial Number Guide product to a random dataset of 4,000 used models listed for retail to find out:
- How often an equipment’s advertised model year was in conflict with the year specified by the listed serial number
- When misrepresented, what was the potential impact to that model’s retail value?
The EquipmentWatch Serial Number Guide is designed to assist in determining the correct model year of equipment. The accuracy in the model year ensures a correct market value can be assessed, correct parts are ordered for repairs, and sales transactions or titles do not create conflict or question of ownership.
Analyzing the actual model years from the 4,000 models included in the test we saw that of the serial numbers that got decoded correctly, about 10% had incorrect Model Years. Of the models that were misrepresented, about 45% of them listed the model year as newer, and the other 55% listed the model as older.
Looking at models that were represented as newer than they actually are, the equipment was listed about one year newer than actual model year. Using the extensive marketplace database behind our Green Guide product, we were able to estimate that this resulted in an average listed price of $4,340 higher than its actual value. Though this 4.5% difference is quite significant, it becomes especially critical in situations where a customer would buy equipment in bulk. For example, if someone tries to buy ten pieces of equipment from the resale market, the buyer has to take a risk of overpaying an average of $1,953 with the purchase. In the worst case scenario, where the buyer purchased the most expensive piece of equipment at the wrong model year, the buyer could be paying an extra $13,019.
Similarly, we can look at the equipment that was listed as older than its actual year. We can see there is a huge discrepancy between the values of the two model years. If the seller forgot the model year and listed it as an older piece of equipment, the seller has the potential to lose about $6,112 on average. If the company is selling a fleet of 10, then on average, the seller has the potential of losing $3,361. In one of the worst case scenarios, the seller could lose on average $18,337.