Excavators Procurement Category Market Research Report from IBISWorld Has Been Updated

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As a result of rising demand and new EPA regulations, prices for excavators are expected to continue increasing in the three years to 2017; as it becomes more difficult to leverage used equipment as a substitute going forward, buyers are expected to encounter challenges in negotiating lower prices. For these reasons and to help procurement professionals make better buying decisions faster, business intelligence firm IBISWorld has updated a report on the procurement of Excavators in its growing collection of procurement category market research reports.

IBISWorld procurement market research
Prices are projected to rise as higher interest rates slightly reduce demand.

Excavators have a buyer power score of 2.5 out of 5. This score is indicative of vendors having a slight degree of pricing power over buyers. Environmental Protection Agency (EPA) regulations have forced manufacturers to produce equipment with lower emissions, which increased their research and development (R&D) expenses, and have resulted in unfavorable pricing trends for buyers. Despite substitutes being available via a secondary-market for used excavators, stricter emission standards have lessened the attractiveness of purchasing older models. Unlike with previous tiers, current technology does not allow Tier 3 engines to be retrofitted to Tier 4 standards. “As a result of rising demand and new EPA regulations, prices are expected to continue increasing in the three years to 2017,” says IBISWorld business research analyst Erick Delgado. As it becomes more difficult to leverage used equipment as a substitute going forward, buyers are expected to encounter challenges in negotiating lower prices.

Due to the volatility in steel prices, manufacturers have struggled to forecast their input costs. This uncertainty has caused vendors to keep their prices high to avoid a financial loss. However, rising global demand for heavy construction equipment has partially alleviated stress on vendors and protected buyers against significant price shocks. “Additionally, vendors' built-in profit margins have mitigated product price volatility, also benefiting buyers,” says Delgado.

Large construction equipment manufacturers dominate the market for new excavators. These companies build specialized products that do not have any viable substitutes, other than renting or purchasing used models. This contributes to the industry's high degree of market concentration. Manufacturers at the top of the market have strong brand recognition and compete by integrating the latest technology in their products. While products from large manufacturers may be more reliable and efficient, their prices come at a premium that is essentially nonnegotiable. Despite this factor, increasing imports from foreign manufacturers have kept equipment prices competitive. Buyers can expect to gain more negotiating power as foreign manufacturers increase their share of the US market. Major vendors include Caterpillar Inc., CNH Global N.V., Deere & Company and Doosan Infrascore Co. Ltd. For more information, visit IBISWorld’s Excavators procurement category market research report page.

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IBISWorld Procurement Report Key Topics

This report is intended to assist buyers of new excavators (e.g. power shovels), which are sold through manufacturers and wholesalers. Excavating machinery includes backhoes on their own dedicated chassis, such as crawler or mini-excavators, as well as long reach excavators and backhoe loaders; all of which can be wheeled or tracked. While an excavator’s primary function is for digging, work tool attachments can be used for material handling and demolition. This report excludes bulldozers and front loaders, forest machines, mining shovels, dredgers, dragline excavators and cranes, bucket-wheel excavators, and all other earthmoving machinery. Also, this report excludes the lease and rental of excavators.
Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics

About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld Inc.
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