Struggling With Sourcing Equipment

[MikePhua]

From Middleman To Dealer And Back Again
In the heavy equipment trade, the hardest part is often not selling machines but finding the right ones to buy. The story of one European dealer illustrates this perfectly.
He entered the industry in 2018 as a broker, acting as the bridge between end users and buyers. At the beginning he drove from site to site, visiting contractors and small fleet owners in person, looking for excavators, loaders, and other machines that owners were ready to move on from. Over time, his reputation did the traveling for him. Sellers began calling him first, because they trusted three things

• Transparent pricing
  
• Fair treatment for both buyer and seller
  
• Reliability in payment and logistics
  

During the COVID years, when travel bans and restrictions shut down physical inspections, he shifted to selling via detailed walk-around videos. Even in that difficult period, not a single client complained about misrepresentation. That kind of zero-complaint record is rare and shows the power of building trust in a niche market.
But as the market tightened and auctions went online, the game changed.
COVID Shocks And The Shift In Sourcing
Global data from 2020–2022 showed used equipment prices rising sharply. In some categories, auction hammer prices for popular excavators and wheel loaders were 20–40% higher than pre-pandemic levels, driven by long OEM lead times and strong demand from end users who could not wait for new stock. Many dealers noticed that “wholesale” auctions started to behave like retail showrooms.
Our broker experienced exactly that. When he decided in 2020 to stop working purely on commission and become a principal buyer/seller with his own stock, he scraped together €25,000 as starting capital. The idea was conservative

• Buy one or two solid machines
  
• Turn them reasonably fast
  
• Grow capital step by step
  

Instead, he discovered that at auctions he was bidding against the very people he used to serve contractors and end users. They were willing to pay retail prices because they planned to run the machines for years, not flip them in weeks. On many lots he was simply outgunned.
The math was ugly

• High hammer prices plus buyer’s fees left almost no margin
  
• Keeping an overpriced machine in stock for months would eat capital in storage, insurance, and interest
  
• Every “maybe” deal carried the risk of becoming a long-term anchor on his balance sheet
  

Under this pressure, he never actually bought a single machine with his €25,000. Instead, the money slowly evaporated into living and business costs while he hunted for the “perfect” deal that never came. By 2023 he closed his brokerage activity and went back to his trade as a mechanic.
A Second Chance With Bigger Capital
Then came a surprising twist. A startup approached him with a proposal a partnership backed by €1,000,000 of investment dedicated to buying and selling machines. For a used equipment dealer, seven-figure buying power is real leverage. With that budget, a small operation can theoretically carry

• 10–20 mid-size excavators or loaders in the €50,000–€100,000 range, or
  
• 40–60 smaller machines around €15,000–€25,000 each
  

if inventory turns roughly every three to four months, that level of capital can support annual transaction volumes several times higher.
On paper, this looked like a dream scenario. In practice, the same bottleneck remained sourcing.
He spent a month aggressively looking for stock

• Contacting end users
  
• Reaching out to other dealers
  
• Offering finder’s fees to people who could bring off-market machines
  
• Ignoring auctions for the moment, because he saw them increasingly as places to dump leftovers and hard-to-sell units
  

Marketplaces and listing platforms in his region were full of other dealers listing machines, but the number of genuine original owners selling directly felt small. The result too many resellers chasing too few clean, fairly priced machines.
Is It Me Or The Market
At this point he started asking the question that many in similar positions ask themselves Is he missing a key strategy, or is the market itself saturated and overheated?
There are several structural factors at work in today’s used heavy equipment market

• Long OEM lead times in recent years pushed end users to hold onto machines longer, reducing the flow of “nice” units to the secondary market
  
• Large rental fleets and big dealers have professional remarketing teams and global networks, so they often sell clean units through their own channels instead of public auctions
  
• Online auctions, once mainly dealer-to-dealer, now attract a high percentage of end users bidding directly, which compresses dealer margins
  
• Digital platforms make prices more transparent, so “steal deals” are rarer and tend to be snapped up quickly by buyers who run automated searches or alerts
  

In other words, his experience is not unique. Many smaller or mid-size dealers report that “buying right” is far harder now than finding buyers for good machines.
Why Sourcing Feels Harder Than Selling
In a seller’s market, two things happen at once

• Good machines are sold before they are widely advertised
  
• The visible inventory is often either overpriced or has hidden issues
  

From a numbers perspective, even a small shift in average acquisition price can kill the model. For example

• If a dealer targets a 15% gross margin on a €60,000 excavator, that’s €9,000
  
• If auction or wholesale prices rise by 8–10% but end user selling prices rise only 3–5%, most or all of that margin disappears
  
• Holding that stock for 3–6 months while waiting for the “right” buyer will further erode profit through financing and overhead
  

This is why our broker feels the “real struggle is buying.” His confidence in pricing and sales is strong, but his acquisition pipeline no longer feeds him the kind of deals that made sense five years ago.
Reframing The Role From Trader To Deal Creator
One common trap in this kind of situation is thinking purely like a trader scanning public markets and hoping to find mispriced assets. That worked better in the past when fewer people were doing the same thing and information moved slower.
A more modern approach is to become a “deal creator” instead of just a buyer. That means building structures where value is added beyond simply taking margin on price. Examples include

• Packaging services inspection, repairs, transport, cleaning, warranty into the deal
  
• Offering finance or partnering with lenders to make it easier for buyers to move forward
  
• Specializing in niches where expertise, reconditioning, or customization matter (e.g., low-emission machines for city work, forestry configurations, demolition packages)
  

In this model, the dealer’s profit doesn’t rely only on buying 20% below market and selling at full retail. Instead, profit also comes from

• Technical knowledge (knowing which models are solid and which years to avoid)
  
• Risk management (screening out problem machines that others might buy blindly)
  
• Speed and reliability (closing transactions fast, handling paperwork and logistics smoothly)
  

Multiple Sourcing Channels Instead Of One Silver Bullet
With €1,000,000 to deploy, relying on a single sourcing channel is risky. A more robust approach spreads effort across several pipelines

• Direct from end users
  • Build a rolling contact program with fleet owners, small contractors, and farmers
    
  • Offer free valuations and “sale ready” consultations
    
  • Position yourself as the first call when they consider upgrading
    
• Cooperation with other dealers
  • Swap inventory lists regularly
    
  • Take on consignment stock that fits your market and let them offload slow units
    
  • Share transport or export opportunities where one partner is closer to the buyer
    
• Targeted auction participation
  • Don’t avoid auctions entirely; instead, define strict buy rules for specific models, hours, and conditions
    
  • Use data from past sales to set maximum bids based on realistic exit prices and holding costs
    
• Finders and scouts
  • Pay structured finder’s fees with clear conditions (e.g., percentage after deal closes)
    
  • Work with mechanics, truckers, and parts suppliers who hear early about machines coming up for sale
    
• Digital outreach
  • Run ads or campaigns aimed at equipment owners rather than buyers, highlighting fast cash offers and hassle-free sale processes
    

The objective is not to dominate every channel, but to have enough streams that even if each yields a few good machines per month, the total volume is healthy.
Pricing Discipline And The Courage To Walk Away
In a heated market, discipline is more important than ever. The temptation to “force” a deal because capital is waiting is strong, but overpaying is how even large funds burn out.
A disciplined sourcing framework might include

• Clear model lists
  • Focus on 10–20 machine types and model ranges where you truly know the market and typical issues
    
• Maximum bid and buy prices
  • Written ceilings based on recent sale data and realistic resale prices, adjusted for hours and condition
    
• Required margin thresholds
  • For example minimum target 12–15% gross margin after all fees and transport
    
• Holding time targets
  • Design inventory so that majority of units should turn within 90–120 days under normal conditions
    

If a prospective purchase doesn’t meet these rules, the correct move is to let it go, even if it feels painful in the moment. One bad machine can lock up more capital and attention than several good ones.
Using Data To Beat Emotion
Many independent dealers still operate largely on “gut feel,” experience, and comparison to a few known prices. With higher capital at stake, upgrading to a more data-driven approach helps.
Practical steps

• Maintain a simple database of recent actual sale prices for your target models, not just asking prices
  
• Track time on market for your own stock and competitor listings where possible
  
• Record realized margins by source channel (auction, private seller, dealer trade, export, etc.)
  
• After six to twelve months, review which channels and model types actually delivered the best return on capital
  

Industry experience from similar sectors (like refurbished electronics) shows that sellers who consistently track supplier performance and batch profitability can improve sourcing decisions significantly over time.
Building A Brand Sellers Want To Call First
The dealer’s earlier success as a middleman came only when end users began to call him instead of him chasing them. Recreating that effect at a bigger scale is possible by intentionally building a “seller-friendly” brand.
Key elements

• Reputation for honest evaluation and no “bait and switch”
  
• Fast answers — owners want to know quickly whether you are interested or not
  
• Transparent process
  • On-site inspection
    
  • Written offer with clear validity period
    
  • Clear explanation of how payment and pickup will work
    
• Optional services
  • Help with VAT or tax paperwork
    
  • Assistance finding replacement machines
    

In a tight market, many owners will choose a slightly lower but guaranteed, hassle-free offer over a higher “maybe” from buyers they don’t know.
Mental Resilience And Avoiding Burnout
It’s important not to ignore the mental side. In his first attempt as an independent dealer, the constant outbidding and the feeling of stagnation slowly exhausted him. That is common in highly competitive sourcing environments.
A healthier pattern for the second attempt could include

• Setting realistic monthly targets for machines sourced, not expecting miracles at once
  
• Agreeing with the investor on clear metrics and time frames so pressure is based on data, not vague expectations
  
• Keeping part of his time on hands-on inspection and mechanical work, which is both his strength and a source of satisfaction
  
• Celebrating small wins early — a few well-bought machines that sell cleanly — instead of focusing only on total volume
  

Is It Really The Market Or Something Missing
So, is he missing something, or is the market simply that tough right now? The honest answer is both.
The market for used heavy equipment has tightened in many regions, with more buyers chasing fewer high quality machines, and with auctions and platforms flooded by professional dealers instead of casual sellers. That is a real structural challenge.
At the same time, there is room to adjust strategy

• Use capital to build direct-from-owner pipelines instead of depending mainly on auctions
  
• Treat sourcing as a system using data, strict pricing rules, and multiple channels
  
• Add value through inspection, preparation, and service rather than relying solely on buying low
  
• Protect mental and financial resilience by pacing growth and refusing bad deals
  

If he applies the integrity and reliability that built his first reputation to a more structured sourcing system, the €1,000,000 backing can become an opportunity instead of a trap. The game has changed since 2018, but dealers who adapt their sourcing to the new reality can still thrive.