Second Quarter Report for 2019

The second quarter of 2019 saw mixed results in many sectors. Declining sales and depressed conditions in the automotive and heavy transport sectors saw those markets continue to go backwards from previous quarters whereas the mining and earthmoving sectors have had positive signs with increases in sales for new equipment and capital investment from the mining sector. Highlights this quarter include:

  • Volvo beat Kenworth in June as the No. 1 selling brand for heavy duty trucks and is only 50 units behind YTD
  • 11% increase in sales for Caterpillar resources assets in the Asia Pacific region.
  • The tractor market continues to see a wide variation in activity within the market with new tractor sales in June up 9% in comparison to May. However, new tractor sales are down 10% on the corresponding period for 2018.
  • Automotive sales at the halfway point of the year are down 8.4%, sales across the six months sit at 554,466 units, which is  51,056 units less than the same period in 2018.
  • The aviation sector has seen significant activity over the last quarter with multiple helicopter and fixed wing transactions in all categories.
  • Slattery Asset Advisory will be hosting the annual Valuations Conference on the 17th and 18th October in the Hunter Valley. Keynote speakers include Cathryn Lee from DeloitteRomesh Rodrigo from FUSO Truck and Bus and Gayle Dickerson from KPMG

Slattery Asset Advisory

Key Point Summary

 

The Slattery Asset Advisory team continued to see an increase in valuation requests from major banks, financiers and private parties to assist in the completion of new loans and loan restructuring applications throughout the second quarter. Our Victorian team completed valuations on over 2,500 assets in June alone and our Western Australian team also experienced an influx of requests in the earthmoving and mining sector.

Slattery Asset Advisory will be hosting our annual Asset Valuations Conference on the 17th and 18th October in the Hunter Valley with the conference covering a variety of topics including the state of the nation,  valuation insights, civil and earthmoving, heavy transport, asset risk management, motor vehicles and more. Keynote speakers include Cathryn Lee an Associate Director in the Macroeconomic Policy and Forecasting Group of Deloitte Access Economics and Romesh Rodrigo Senior Manager Product Planning and Engineering at FUSO Truck and Bus, Mercedes-Benz Australia. Tickets are on sale now for more information, click here.

 

Road Transport

Heavy Duty Trucks Market

The Australian new-truck market, especially heavy trucks, finally succumbed to the downward pressure of a sluggish economy this quarter with April down 6.6 % and June down 10.1%. Sales in all truck categories were down on 2018 results with the heavy vehicle market showing clear signs of slowing demand in 2019. Year-to-date sales have now slipped to trail the record 2018 results by 411 units, bringing the total to 3,506 sales for April to June, down on the second quarter 2018 result by 10.5%.

It was a rare month in June when Volvo took the lead off Kenworth with the highest volume of new trucks sold for the month with a total of 225 units. However, Kenworth continues to be the dominant leading brand for heavy trucks for the year with a total of 1,154 units sold year to date across Australia. Volvo followed closely with a total of 1,104 units sold year to date only a mere 50 units behind Kenworth closing what has previously been an enormous gap between first and second place in the market. The new heavy duty truck market hit a total of 6,422 units sold in Australia year to date. While much of the heavy-duty truck segments are battling the slowdown in the market the European brands have seen growth. Volvo has seen a 9.4% increase in sales and Scania has seen a 22.6% increase in sales year to date.

Volvo brand took the lead with the highest volume of new trucks sold for the month of June

Medium and Light Duty Trucks Market

The second quarter saw a drop of 11.1% in sales for the medium duty truck segment across the country with a total of 796 units sold. The Japanese brands continue to dominate this segment with Isuzu leading the way with a total of 347 units sold for the quarter, followed closely by Hino with 255 units sold.

The light duty truck market saw a decline in sales throughout the second quarter, however the decrease in sales was not as substantial as the decrease in the heavy duty and medium duty truck segments. The light duty segment had an overall total of 1,274 units sold across the country, this is a 2.3% decline on sales for the same period in 2018. Isuzu is the leading brand in the second quarter with a total of 498 units sold and a decline of 7.8% in sales on the same period in 2018. Second-place Hino sold a total of 258 units throughout the second quarter, with a 3.3% decline in total sales in compared to the corresponding quarter in 2018.

The second quarter saw a drop of 11.1% in sales for the medium duty truck segment across the country

Secondary Road Transport Market

The second quarter has been a continuation of the previous difficult quarters across the secondary road transport market, with the sector continuing to struggle across the country. This was highlighted during our New South Wales auctions, when a 2013 Western Star 4900FX 6×4 prime mover failed to attract a bid throughout all three sales during the quarter. It has been estimated that the wholesale value of prime movers under 6 years of age has decreased by at least 15% this quarter, and that there had been a much larger decrease in wholesale value of trucks over 6 years of age due to the large volume of newer trucks that are currently available on the market.

New South Wales has seen a notable drop in the truck and dog market throughout the quarter, in which we offered a 2014 Freightliner Coronado Tipper with a 2014 Borcat Super Dog Tipping Trailer in our May auction as a set. Both assets were in extremely good condition and had a combined valuation of $120,000, but no support could be found at the $80,000 mark. In comparison, these same assets would likely have made $160,000 or more at auction twelve months ago. When comparing the current market to recent years, it is important to remember record state spending in infrastructure across New South Wales, Victoria and Queensland, which saw demand for these assets sky rocket.

Whilst some infrastructure projects are being finalised, such as the first stage M4 tunnel now complete, which has seen more assets available on the market, there remains at least 3 other major underground projects (North Connex, Sydney Metro Northwest and Southwest) still going on and more to commence. We anticipate that this should see demand for tippers to return in time.

Despite the depressed market in the road transport sector we are still witnessing solid results for certain truck types within the market. Our Victorian auction achieved strong results for a 2018 MAN TGM 18.340 4×4 Cab Chassis Truck with 2,503 hours showing selling for $146,900 achieving 97% of retail.

In Queensland, it has been noted that good quality, low kilometre tippers are still in demand and selling well whereas second hand rigid curtain siders are particularly difficult to sell, with very little demand, which corresponds with the lack of work for these units within the state.

Used Trailer Market

Throughout the country we have seen the secondary trailer market continue to soften in the second quarter aligned with the road transport sector. However, there is an exception to this trend for certain types of trailers across the market. Queensland are seeing strong demand for good quality low loaders and a shortage of quality product on the market as seen in the sale of a 2010 Titan Tri-Axle Low Loader which sold for $55,000 in the Brisbane truck and machinery auction. This asset achieved 90% of retail value.

In Victoria, Tautliner sales through our June truck and machinery auction were strong with many late model trailers presented.  High Cube 14 pallet trailers were in high demand with the hammer finally falling at $95,700 for a 2017 Vawdrey VBS3 High Cube ‘B’ Tautliner to an end user who transports large volumes of freight interstate. This variance can be isolated to new stock as good quality trailers are currently in demand by heavy transport companies and will always sell well.

Assets Kms/Hours Price
Achieved
% of
retail
State
2008 Kenworth T658 Prime Mover 758,902 $108,000 100%
2017 Vawdrey VBS3 High Cube 'B' Tautliner $95,700 100% VIC
2016 Vawdrey VBS3 'A' Drop Deck Tautliner $78,500 100% VIC
2016 Vawdrey VBS3 'B' High Cube Tautliner $78,500 100% VIC
2011 Iveco Eurocargo ML160 6x2 Curtainsider 617,777 $36,000 100% NSW
2018 Man TGM 18.340 4x4 Cab Chassis Truck 2,503 $146,900 97% VIC
2016 Western Star 4864 Prime Mover 485,473 $106,000 95% QLD
2017 Mercedes Benz 2663 Actros Prime Mover 204,937 $113,000 95% QLD
2010 Southern Cross Drop Deck Widener $74,000 92% WA
2011 Howard Porter Side Tipper $50,500 91% WA
2011 Kenworth T904 Prime Mover 1,101,508 $55,000 90% QLD
2010 Titan Tri-Axle Low Loader $55,000 90% QLD
2016 Mercedes-Benz Actros 2651 6x4 Prime Mover 93,912 $141,500 90% VIC
2017 Hino GH 500 1828 4x2 Tipper 68,059 $97,900 90% VIC
2010 Hino Service Truck 60,302 $71,000 88% WA
2010 Isuzu NPR 300 4x2 Tipper Truck 76,062 $33,700 85% VIC

Mining and Earthmoving

New Earthmoving Market

Market leaders, Caterpillar saw a 3% increase in sales and revenue in the second quarter. Caterpillar’s construction and resources industry divisions generated most of the sales and revenue across the entire corporation. The construction industry in Asia/Pacific saw a 22% decrease in revenue due to lower demand mainly due to China however sales in to the resources sector saw an 11% increase on the same quarter last year due largely to increased capital expenditure by miners paying higher prices suggesting that the demand and confidence in the mining sector remains strong. Sales for non residential construction, quarrying and aggregate customers also increased over the quarter.

In comparison, Komatsu saw a decline of 5.6% in revenue and sales in the second quarter, when compared to the same time in 2018. Komatsu related these results to a steady demand for mining and construction equipment in the North America and Oceania regions but a decrease in demand for the equipment within the Asian regions.

The resource industry alone saw an 11% increase in for Caterpillar in the Asia Pacific region.

Used Earthmoving Market

Across the country, we saw similar trends continue into the second quarter of 2019 with the Earthmoving sector continuing to soften. Despite softer conditions, we are still achieving market value for late model and good quality secondary equipment – notably for late model 5 tonne to 35-tonne excavators at auctions. This is evident in the auction results of a 2016 CASE CX130C Excavator with 2,876 hours showing selling for $76,700, achieving a 100% of retail value in Victoria and a 2018 Kobelco SK300LC-10 Excavator with 1,582 hours selling for $245,000 and achieving 110% of retail value in Queensland. Meanwhile, the downward trends for older excavator units with 8,000 plus hours continue across the country, with units struggling to sell at anywhere near 2018 prices.

The Queensland market can draw a correlation of the softening in the market to the lack of infrastructure projects available within the state, with many placing the blame on the current State Government for not investing like NSW. This has led to numerous civil contractors selling surplus equipment or closing operations altogether due to the lack of infrastructure work and the downward pressure to keep margins at an all-time low.

The New South Wales market continues to struggle in the earthmoving equipment sector, with a reported 20-30% decline in sales of 45 tonne excavators and a 15 percent decrease in auction prices for small to medium sized diggers. However, the sector has continued to see pockets of demand for high quality graders throughout the state, but prices for these units have still fallen by 5 to 10 percent in price at auctions.

Within Victoria, civil earthmoving equipment has continued to attract interest from buyers throughout the second quarter and we have seen an increase in the number of assets we have seen entering the secondary market due to an increase in repossessions.

Assets Kms/Hours Price
Achieved
% of
retail
State
2018 Kobelco SK300LC-10 Excavator 1,582 Hours $245,000 110% QLD
2018 Hitachi ZX135US-5B Excavator 1,000 Hours $169,500 110% QLD
2004 Caterpillar 12H Grader 12,789 Hours $100,000 110% QLD
2014 Hitachi ZX260LC-5B Excavator 3,663 Hours $135,000 100% QLD
2017 Hitachi ZX225USLC-5B Excavator 2,368 Hours $200,000 100% QLD
2018 Hitachi ZX360LC-5B 1,380 Hours $250,000 100% QLD
2008 Komatsu WA480-6 Wheel Loader 13,262 Hours $94,000 100% QLD
1999 Caterpillar 816F Landfill Compactor 11,698 Hours $78,000 100% QLD
2015 Case CX130C Steel Tracked Excavator 2,876 Hours $76,700 100% VIC
1999 Terex Franna AT20 Crane 14,446 Hours $97,000 95% QLD
2012 Caterpillar 432E Backhoe Loader 3,144 Hours $57,000 90% QLD
2011 Caterpillar 246C Skid Steer Loader 632 Hours $36,000 90% QLD
2010 Komatsu GD 55 Grader 9,151 Hours $80,000 90% QLD
2016 Kubota KX057-4 Zero Swing Rubber Tracked Excavator 1,704 $53,500 90% VIC
Kobelco SK45SSRX Hydraulic Excavator 249 $46,000 80% VIC

Agricultural

New Agricultural Market

The tractor market continues to see a wide variation in activity within the market with new tractor sales in June up 9% in comparison to May. However, new tractor sales are down 10% on the corresponding period for 2018. The increase in sales can be related to most of country having an increase in production due to favorable conditions. This has resulted in the demand for agricultural machinery in these regions continuing to hold strong within the market. The results reflect a consumer boost after the federal election, reduced interest rates and suitable rainfall. In comparison, drought-affected New South Wales and Northern Victoria continue to see a struggling market as demand remains low.

Baler machines continue to stay strong, with demand for hay still at an all-time high, and have seen an increase of 25% of units sold from the same period in 2018. The Combine Harvester sales in the second quarter remain steady, with the Tractor and Machinery Association of Australia predicting only 550 units to be sold in the upcoming quarters, down from 800 units in the past few years.

new tractor sales are down 10% on the corresponding period for 2018

Used Agricultural Market

Secondary equipment sales in the agricultural sector within in the Victorian and New South Wales market continue to stay steady, this is due to the impact that the drought has had in Northern Victoria and New South Wales and the lack of work in these regions. However, as the sector remains steady, we continue to see auction results meet expectations for agricultural assets, notably we saw the sale of a 2018 Flip Screen Australia BL 65 Rotary Screen for $15,000 and a 2016 Lawless Laser Agri-28 Laswer Grader selling for $35,000, with both of these units achieving a 100% of retail value.

Assets Kms/Hours Price
Achieved
% of
retail
State
2018 Flip Screen Australia BL 65 Rotary Screen $15,000 100% VIC
2016 Lawless Laser Agri-28 Laswer Grader $35,000 100% VIC
2017 John Deere 6110M Tractor 860 Hours $66,100 95% QLD
2017 John Deere 6095MC Tractor 600 Hours $56,600 95% QLD
2013 Koro Field Top Maker FTM200 $21,000 92% VIC

Aviation

The aviation sector has seen significant activity over the last quarter with multiple helicopter and fixed wing transactions in all categories. In the rotary sector, the Robinson R44 and R22 helicopters continue to be in very strong demand in the agricultural and flight training sectors with multiple transactions throughout Australia. The fixed wing sector, single engine piston aircraft transactions have seen the greatest activity and strong prices for good timed aircraft. The demand is due to these aircraft being cheaper to operate and many buyers were looking to either upgrade or add to their current fleet. However, buyers of twin-engine piston aircraft continue to be hesitant due to operating costs. Single and twin turbine aircraft prices continue to remain strong with the price backed on the strength of the American Dollar.

Over the last quarter, Slattery Auctions successfully held an Expressions of Interest campaign of over 30 aircraft with all aircraft being sold. The sale campaign attracted significant national and international interest and was a competitive process that achieved the best outcome for our client.

Motor Vehicles

New Vehicle Market

The motor vehicle market has continued to struggle throughout the second quarter of 2019 with vehicle sales dropping to an eight-year low, with attribution being placed on tighter financial lending, weak inflation, increasing luxury car taxes and the federal election. This was seen with a 8.9% decline in new vehicle sales in April 2019, continuing the thirteenth successive month where sales were lower than the corresponding month in 2018. However, in Tasmania and Western Australia, the industry is starting to see some positive signs with the new vehicle sales beginning to be on the rise.

The final tallies for the end of the second quarter, saw SUV’s make up the total new vehicles sales with 43.9% of the market share, followed by passenger vehicles at 31.5% and light commercial vehicles at 20.6%.

Automotive sales at the halfway point of the year are down 8.4%, sales across the six months sit at 554,466 units, which is  51,056 units less than the same period in 2018.

Despite generous end-of-financial-year incentives and stronger economic indicators since the federal election in May, which have boosted the fortunes of some premium brands, the market appears headed for its lowest result since 2012.

The upwards trend in the new vehicle market, which are anticipated to be areas of growth within the industry, will be the sales for medium and compact SUVs and electric and hybrid vehicles. This in relation to consumers favoring smaller, fuel-efficient cars and compact SUV’s throughout the market.

Automotive sales at the halfway point of the year are down 8.4%

Used Vehicle Market

Throughout the second quarter, we have seen a decrease in repossession assets, with an expectation that these numbers will rise within the second half of 2019, this is aligned with previous trends in the market.

Late model, low mileage vehicles that are in good condition are continuing to perform well across the industry, with the demand for utility vehicles within the market remaining as the number one pick as seen during our Victorian auction with the sale of a 2017 Ford Ranger Wildtrak 3.2 Dual Cab with 9,786 kms  selling for $48,500, representing 100% of retail value. It has been noted, despite the demand for utility vehicles, the market has softened for late model Mitsubishi Tritons, which has been attributed to Mitsubishi releasing their new model Triton at a lower cost.

Our Queensland office, has reported that late model commercial vehicles and SUV’s continue to be favorites within the secondary market, with consumers fighting till the close to purchase these vehicles.

The decrease in new car sales is impacting the used vehicle market, as there is a lack of stock through traded vehicles due to consumers not purchasing newer vehicles to replace their older vehicles. This has had a noticeable impact in the Eastern States, with many buyers purchasing vehicles for retail value as showed with the sale of a 2015 Mitsubishi Lancer Evo with 43,289 kilometers selling for $40,600 and achieving 100% of retail value.

Assets Kms/Hours Price
Achieved
% of
retail
State
2016 Holden Colorado LS 38,000 $28,000 101% WA
2018 Lexus LX570 Wagon 11,727 $116,500 100% QLD
2015 Mitsubishi Lancer Evolution 43,289 $40,600 100% QLD
2010 Toyota Landcruiser GXL 156,923 $43,250 100% QLD
2018 BMW 5 30I M-Sport 8,775 $62,300 100% QLD
2017 Ford Ranger Wildtrak 3.2 (4x4) Dual Cab 9,786 $48,500 100% VIC
2017 Porshe Macan 24,379 $73,500 96.5% WA
2017 Mercedes Benz Sprint 30,670 $36,850 95% QLD
2017 Holden Colorado Z71 4x4 25,777 $35,860 95% QLD
2017 Holden Colorad,874o LTZ (4x2) 40,874 $33,500 94% VIC
2018 Toyota Hilux Workmate C/Chas 28,216 $18,000 93% VIC
2018 Toyota Hilux SR5 18,526 $40,000 88% NSW
2013 Mercedes SL500 23,808 $84,000 84% NSW