The Total Cost of Ownership (TCO) as top value driver in Construction Equipment Industry
One of the most important long-term investment for a Mining & Building company regards the purchase of the suitable equipment, in order to better organize own activities on roads, mines, etc.. This equipment is mostly composed by several Construction Equipment (CE) machines, as Excavators, Wheel Loaders, Articulated Dump Trucks and Pavers. The global construction equipment market size was valued at US$ 128.46 Bn in 2018 and is expected to reach US$ 186.42 Bn by 2026.
Every company look for powerful and reliable machines but, at the same time, affordable. Obviously, the first tangible company cost is the purchase price of the machine, but that’s not the only cost during machine intended life, as every machine needs cyclic maintenance, besides parts breakdown that have to be replaced. Mainly, when it happens companies refer to official dealership of their machines brands and that’s why the initial purchase price is not the only budgeted cost regarding a CE machine purchase.
Total Cost of Ownership (TCO) includes all the expenses related to construction equipment ownership. Among several components (as Interest rate, residual value at the end of ownership period, fuel consumption, etc.) the most relevant one regards “Repair and maintenance costs for the machine intended life”.
For this reason, every market player (Original Equipment Manufacturer) is increasing their efforts to manage as well life cycle maintenance and repairs of a machine, focusing on spare parts costs and life time of every single item composing a CE machine (from Filters to Cylinders, through Engine Components and Brake parts), since is always more widespread the trend of comparing the initial purchase prices to TCO, in order to evaluate which machine makes the most financial advantage over the long run. Furthermore, proposals of Service Contracts, which include several maintenance services for a fixed fee, are usually proponed at the moment of machine purchases, in order to reduce the impact of maintenance cost over the years and to increase the brand loyalty.
MarketingPro is engaged in the analysis of the TCO, providing accurate and tangible feedback to its business customers, in order to support them to face the fierce competition in the CE Industry, since the presence of many global markert competitors with similar models proposals. One of the basic discriminants, as said, the Total Cost of Ownerhip.
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