December 3, 2025 – The used equipment market is demonstrating remarkable resilience, holding strong even as commodity prices continue their downward trend. This surprising buoyancy is being observed across various sectors, with an Illinois-based auction agent highlighting sustained demand, particularly in the agricultural and construction machinery segments. This counter-intuitive market behavior suggests a deeper economic current at play, driven by factors beyond immediate commodity valuations.
The current landscape presents a paradox: while global commodity markets have seen consistent declines through late 2024 and are projected to continue dropping into 2025 and 2026, the market for pre-owned machinery remains robust. This divergence points to a strategic shift among businesses and farmers, who are increasingly turning to cost-effective used alternatives in the face of prohibitive new equipment costs and extended manufacturing lead times. The implications are significant, signaling a more pragmatic approach to capital expenditure and a potential re-evaluation of asset acquisition strategies across industries.
A Market Unfazed: Drivers Behind the Used Equipment Boom
The strength of the used equipment market, particularly as noted by industry insiders, is multifaceted. Mark Stock, co-founder of Big Iron Auctions, an Illinois-based firm, recently commented that the used equipment market is trending "steady to higher." Stock specifically pointed to the combine market, stating, "the combine market reached its lows in June of this last year and they've been going higher ever since," attributing this upward trajectory to the difficulty in finding new combines due to slowed manufacturing. This observation from late 2025 underscores a critical supply-side constraint bolstering the used sector.
Several key factors are fueling this demand. High new equipment costs, exacerbated by inflation, rising material expenses, and regulatory changes, have made new machinery an increasingly expensive proposition. Furthermore, manufacturing lead times for new equipment can stretch from six months to over a year, forcing buyers to seek immediate solutions in the used market. Government-backed initiatives, such as the Infrastructure Investment and Jobs Act (IIJA) in the U.S., are injecting significant capital into infrastructure projects, particularly in regions like the Midwest, thereby creating a sustained demand for heavy construction machinery. Elevated interest rates also make financing new equipment less attractive, pushing companies towards cash purchases or better deals on pre-owned assets. Tariffs implemented in early 2025 on steel, aluminum, and certain imports have further inflated new equipment production costs, making used options even more appealing. The increasing sophistication and reach of online auction platforms has also widened the buyer pool, streamlining the sales process for used machinery.
Winners and Losers: Navigating the Shifting Equipment Landscape
The sustained strength of the used equipment market creates a distinct set of winners and losers across various industries. Auction houses and equipment dealers specializing in pre-owned machinery are clear beneficiaries. Companies like Big Iron Auctions, with its Illinois roots, are seeing increased transaction volumes and potentially higher margins on certain high-demand items. Other large-scale auctioneers and online marketplaces that facilitate used equipment sales are also poised to thrive.
Conversely, manufacturers of new equipment, such as John Deere (NYSE: DE), headquartered in Moline, Illinois, face a more complex environment. While John Deere reported higher tractor and construction equipment sales in Q4 2025, the company anticipates tariffs and a slow farm economy will continue to impact the upcoming year (2026). The robust used market directly competes with new sales, potentially suppressing demand for new units, especially in categories where used alternatives are readily available and significantly cheaper. This forces manufacturers to adapt pricing strategies, innovate, or focus on segments less impacted by used market competition. Construction companies, particularly those engaged in large-scale infrastructure projects, stand to win by leveraging the cost-effectiveness and immediate availability of used heavy equipment, allowing them to stretch their project budgets further. Farmers, facing low commodity prices, can also benefit by acquiring necessary machinery at more reasonable costs, improving their operational efficiency without significant capital outlay.
Broader Implications: A Strategic Shift in Capital Allocation
This sustained strength in the used equipment market is not an isolated phenomenon but rather a significant indicator of broader industry trends and a strategic recalibration in capital allocation. It highlights a growing preference for value and efficiency over brand-new assets, especially in sectors sensitive to economic fluctuations and input costs. The event fits into a wider narrative of businesses prioritizing operational resilience and cost control in an environment marked by economic uncertainty, inflationary pressures, and supply chain disruptions.
The ripple effects are felt across the supply chain. Equipment rental companies might see increased demand for shorter-term needs, as businesses opt for rentals over new purchases. Competitors in the manufacturing sector may need to re-evaluate their production volumes and pricing strategies, potentially leading to increased incentives or financing options for new equipment to remain competitive. Regulatory or policy implications could arise if the shift to used equipment impacts emissions standards or safety regulations, though for now, the focus remains on economic drivers. Historically, strong used equipment markets often emerge during periods of economic tightening or high new equipment costs, mirroring patterns seen in past economic cycles where businesses prioritized capital preservation. The increasing prevalence of online auctions has also democratized access to the used market, intensifying competition and price discovery.
The Road Ahead: Adaptation and Opportunity
Looking ahead, the used equipment market's trajectory will likely be shaped by a confluence of economic factors. In the short term, the demand for used machinery is expected to remain strong, especially if new equipment lead times persist and interest rates remain elevated. This presents continued opportunities for auction houses, used equipment dealers, and businesses looking to upgrade or expand their fleets on a budget. The agricultural sector, in particular, may see continued strategic investment in four- to seven-year-old machinery, as farmers seek value amidst low commodity prices.
In the long term, the market's resilience could prompt strategic pivots from manufacturers, potentially leading to increased focus on aftermarket services, parts, and maintenance for the burgeoning fleet of used equipment. They might also explore subscription models or certified pre-owned programs to tap into this market segment. Market opportunities will emerge for technology providers offering advanced diagnostics and telematics for older machinery, enhancing their operational lifespan and efficiency. Challenges include ensuring the quality and reliability of used equipment, which necessitates robust inspection and certification processes. Potential scenarios include a gradual rebalancing if new equipment costs stabilize and production ramps up, or a sustained two-tiered market where new and used equipment cater to distinct buyer segments based on budget and urgency.
Concluding Thoughts: A Prudent Path Forward
The enduring strength of the used equipment market, despite the headwinds of low commodity prices, is a testament to the adaptability and pragmatism of businesses in navigating a complex economic landscape. The observations from Illinois-based auction agents underscore a fundamental shift in purchasing behavior, driven by economic necessity and strategic foresight. This market segment is not merely a fallback but a vital component of the capital expenditure strategy for many enterprises.
Investors should closely watch several key indicators in the coming months: new equipment production lead times, interest rate movements, the trajectory of commodity prices, and government infrastructure spending. The performance of key players like John Deere (NYSE: DE) and the sales volumes reported by major auctioneers will offer valuable insights into the market's direction. The used equipment market's current vigor highlights a broader trend towards efficiency and value, making it a critical barometer of economic health and business sentiment.
This content is intended for informational purposes only and is not financial advice