´Today, used Motor Grader is the hottest selling item in the used equipment market in India´ says Anand Singh, Co COO, Gemini Equipments and Rental.
Owing to a very high demand, practically all recognized Motor Grader manufacturers of like Caterpillar, Komatsu, Volvo, LeeBoy, Tata Hitachi and others are selling used Motor Graders either directly or through their authorized dealerships, closely followed by organised resellers cum auctioneers like Quippo, Shriram Automall, Gemini Equipments, Infrabazaar and finally at tier III, level by small and medium sized resellers spread all over the country. EQUIPMENT INDIA explores this market at grass root level.
There is literally a stampede in the market to acquire used motor graders, in India. Many road projects are already under execution and there are more to come in the near future. Some resellers who do wish to be named claim that if they have available stocks they can sell 30 to 40 graders in one day!
GEAR who is currently in the mode to downsize their rental fleet has been able to sell the entire fleet of used motor graders, at handsome prices, without any problem. A large number of primary contractors involved in road projects, are breaking up grading work into small sections ranging from 2 to 10 km. and awarding job orders to local contractors for reasons of cutting costs, providing job opportunities to locals and also for maintaining peace and harmony at their project sites by using this method as a means to pacify local sentiments and ambitions. This method enables smooth and disturbance free execution of the road works. Consequently, this has become the largest growth driver for used motor graders.
Buy versus Rent analysis reveals that the prevalent average monthly rent for graders is Rs 3.50 to 4.00 lakh per month. Further, permissible usage is limited to 160 hours per month. Any usage beyond the permissible hours charged extra on pro rata basis and the customer has to also pay for operator, his food, accommodation, healthcare etc. Therefore for even for an average project duration of 8 months for the said small job works renting is unviable and the decision to buy is favored. Secondly, the small contractors are also able to resell their used graders after completing the job, at almost the same price as their purchase cost, in case they do not have further orders. Looking at the market condition and interest of accelerating NHAI has also relaxed their rules, thereby enabling deployment of old and used graders in national and state highways. Therefore, the job work awarders are not really concerned regarding the age of the equipment; so long their work is executed in time, at budgeted costs. On the other hand, poor financials are compelling most big fleet owners to downsize their equipment assets, resulting in a healthy availability of second hand motor graders. Some resell the equipment on their own while others use OEM or Authorised Dealership or Auctioneer or Local resellers or even brokers to dispose their equipment. Vineet Mehta, Head Theme Engineers Associates & Management, a used equipment broker claims´there are no used graders available in the market, most used graders are being grabbed by either OEMs or big resellers´ Overall this market appears dynamic, live and full of wheeling and dealing.
Market size and prevailing prices
Although the information on used motor grader market is fragmented, it has been estimated by consulting many resellers that the market in FY 15 is in excess 500 machines and expected grow by nearly 100 per cent in FY 16.
Unconfirmed sources reveal that the reselling price of used grader hovers in the range from Rs. 30 to 60 lakh, depending up on the age, brand and machine condition. Manufacturing year 2003 to 2006 models fetch lower prices while year 2008 to 2012 models sell at premium prices.
´Many small buyers are procuring very old Komatsu graders at throw away prices, repower them with equivalent Cummins engines and deploy them for their job work,´ says Mehta.
Supply chain dynamics
Caterpillar, Komatsu and the Chinese manufacturers, import brand new fully assembled motor graders for supplies in India. Others are manufacturing the graders in India through SKD or CKD kits and a mix of imported and indigenized sub assemblies and fabricated structures. After a few years of use by the original buyers they find their way in to the used equipment market.
OEMs and recognised resellers usually refurbish the equipment and lure customers by offering limited warrantee and quality after sales service support. On the other the local resellers may carry out minor repairs or sell them in ´as is where is´ condition but at much lower prices.
Import of used graders is practically zero, mainly because the most foreign countries use large size graders which are not preferred in India. NHAI permits 120 to 130 HP class with 12 ft mouldboard size graders for road works while graders having 160 HP or higher horse power and 14 feet moldboard size are standard in foreign countries. H Jayaram, MD and CEO, Gmmco comments: ´We sell both new and used graders. It is a solution to the customer. When a customer wants new but when they cannot invest we sell them used machines. We have two sources. One is from our rental fleet; the same are rolled out for resale and second is from our customers. It must be understood that these machines have been maintained by us and in very good condition. Normally graders are not like utility machines, their usage is also less. Hence they are in very good condition´
Critera: Brand Selection
Most buyers are looking for used graders which are rugged, reliable, easy to operate and maintain by local, low skilled crew, ready availability of spare parts and have high resale value. They shy away from graders equipped with sophisticated technologies and electronics in particular as they are unable to find the required skill sets to operate and maintain such equipment.
Most Chinese brands are unable to provide adequate spares support, while Volvo grader is too complex to maintain owing to extensive electronics in their grader. On the other hand both Caterpillar and Komatsu largely meet the selection criteria and hence lead the market.
Since a large number of road projects are already under execution and many more are in the pipeline, the overall market prospects are good. ´Used grader is relatively a good market compared to other equipment models. Still grader is a critical element of road making. The contractors look for premium high quality machines. Today the cost of brand new machine is high but there are many buyers who look for 2 or 3 year old machines. We ourselves sell used machines. What we do is that we take back 2 or 3 year old machine, we do some refurbishment and bring out like a brand new machine literally in a very condition and we resell to the customers. Overall it is a good market´ says Jayaram.