Heavy Equipment Depreciation: How Fast Does Your Iron Lose Value?

Heavy equipment is a depreciating asset. But not all machines lose value at the same rate. Understanding depreciation curves can save you thousands when timing a purchase or sale.

The General Rule: 10-15% Per Year

Most heavy equipment depreciates roughly 10-15% per year in the first five years, then the curve flattens. But there are big differences by category:

• Excavators: 12-15% per year. Strong demand keeps resale values relatively high, especially for Cat and Deere.
• Skid Steers & CTLs: 15-18% per year. Higher depreciation due to harder use and lower price points.
• Wheel Loaders: 10-13% per year. Workhorses with long service lives; depreciation is steady.
• Dozers: 10-12% per year. Large dozers hold value well, especially in mining and land-clearing markets.
• Telehandlers: 14-17% per year. More niche use cases mean less consistent resale demand.

What Accelerates Depreciation

Not every machine follows the curve. Several factors make depreciation faster:

1. High hours: A machine running 1,500+ hours/year depreciates faster than one running 600 hours/year, even if they're the same age.
2. Poor maintenance: Skipped services, leaking cylinders, and worn undercarriage can knock 20-30% off the expected value.
3. Emissions tier changes: When new emissions regulations hit (Tier 3 → Tier 4), older machines drop in value. This happened significantly in 2014-2015.
4. Model discontinuation: When a manufacturer replaces a model line, the old generation typically drops 5-10% faster.

What Slows Depreciation

Some machines hold value better than expected:

• Cat and Deere premium: These brands consistently command 10-20% more than competitors of the same size/age due to parts availability and dealer networks.
• Low hours: A machine with half the average hours for its age commands a significant premium.
• Attachments included: A machine sold with a thumb, coupler, and multiple buckets is worth more than a bare machine.
• Service records: Documented dealer maintenance history adds 5-10% to resale value.

The Sweet Spot: When to Buy and Sell

For buyers, the best value is typically in the 5-7 year range. The steepest depreciation has already happened, but the machine still has plenty of productive life left.

For sellers, the key is to avoid holding past the 8-10 year mark when depreciation flattens. You're not losing much value per year, but major component replacements (engine, hydraulic pump, undercarriage) start becoming necessary and can cost $20,000-$50,000+.

The ideal sell point for most equipment is 4-6 years: you've gotten good use out of it, it still shows well, and you're ahead of major component replacements.