Business Rationale When Buying New Excavator

[VH5150]

Hi all... No real reason for my questions other than just curiosity.

I recently had to hire an excavation company to dig some test pits for a new septic design. The contractor brought in a Cat 420F towed by a Cat dump truck. I was chatting with him and he revealed that he is an all-Cat shop and his most profitable machine was actually a Cat 307.

It got me wondering how a contractor makes equipment purchasing decisions relative to their business. This contractor was all Cat. Others seem to be all Deere or all Volvo. Why do businesses seem to pick one brand over others? Is it because of price? Is it because of the reliability? Is it because of repairs and maintenance? Fuel consumption? Because of brand and loyalty and costs be darned? When they do choose a particular product how do they estimate how profitable a particular machine might be?

Loaded questions for sure! I'm not in the biz rather I'm just a curious outsider looking in...

As always, thanks in advance for any replies

 

[Will_C]

My brother runs a small excavation that was started by my father 50 years ago. They have predominately used Case equipment- until a couple of years ago, every piece of new equipment purchased was Case. I think all the reasons you mentioned have factored in-dealer familiarity, brand loyalty, comfort with the design and function of the machine, ability to do repairs, and having an inventory of spare parts, filters, fluids etc. for the brand.

My brother has purchased a new excavator and a new CTL over the past 5 years. He left Case for these 2 machines- the excavator is a Takeuchi and the CTL is a Bobcat. He had no experience with this equipment (always used dozers, crawler loaders, and backhoes) He did a real objective search and felt these met his needs at a price point he was comfortable with.

He did buy a new dozer last year- a Case 650-the 9th new Case dozer the business purchased- my father's first was a 310 bought in 1964.

Will

 

[CDN Farm Boy]

I can't say it's any different than any other buying desicion, just bigger toys an bigger price. Think about all the different buying choices we make weather it be soft drink, pizza shop, tractor, truck, tools, work boots...... Sometimes its as simple as cause you like one better, sometimes there are tangible features that better suit your needs, sometimes its about price, sometimes it because its just the way you were raised and don't know any different.

I love my DeWalt tools and will happily pay a premium for them. I'm a John Deere fan but wasn't willing to pay a substantial premium for one and bought a Kubota instead

 

[2458n]

Many repeat customers do so because of the financing. They stay with a dealer because they have a established line of credit.

 

[Industrial Toys]

I think 2458n is probably quite correct. I am always checking out brands on big watermain projects and the like. Sometimes you see all the same brand but they are all from a rental company.

I think some guys may figure that they have more pull with their dealer if they make him exclusive to their needs.

 

[Jim Timber]

When you're a bigger fish, you get better treatment. If you buy one machine and it goes down, is that shop going to give you priority service, or are you getting in line for when they get around to it? If you buy a machine from them every couple years, that dealer will do what they can to keep your business coming.

 

[rtimgray]

Same answer as many have stated above. A contractor that I work with is almost exclusively Case equipment, because in this region, he has good support from multiple dealerships, they get him parts that he needs quickly, and treat him fairly. He does have some other brand equipment, but it is more of his "second line" stuff - things that he doesn't necessarily use everyday but still needs them. He has bought them used from various sources. But for his "bread and butter" equipment, he sticks with the brand that he has used for years and has had good luck with.

Good luck and take care.

 

[VH5150]

How about depreciation and the decision to retire a machine and buy new. I've heard some guys say they'll put X number of hours on a machine and then sell it and buy a new one, stating it's cheaper to do so. That seems counter-intuitive to me.

 

[Industrial Toys]

I guess that's their business plan. A man dug a lady I knew a pond. He didn't own a piece of equipment, renting everything. All nice new tight equipment and just hired occassional help. He was a real smooth talker and really soaked the ladies.

No contractor likes repairs or down time, so the trading in thing may work. Many newer peices of equipment are leased anyway. The guy I use has maybe forty peices of old equipment and some of the stories of repair and component costs would make your hair turn white! Ever price a pump for an excavator, a wheel motor for a dozer or a tranny for a rock truck?

 

[VH5150]

The guy I use has maybe forty peices of old equipment and some of the stories of repair and component costs would make your hair turn white! Ever price a pump for an excavator, a wheel motor for a dozer or a tranny for a rock truck?

That would make for a great thread, repair nightmares! No, I've never priced any of those items... I wouldn't mind hearing about those costs though, if anyone wants to share.