One Man's Garbage is Another Man's Gold

Who is your greatest competitor in Latin America? If you sell brand new capital equipment, the greatest threat may come form your own products. Manufacturers face several obstacles in trying to penetrate the Latin American market with new equipment sales, including lack of credit, import tariffs, and cyclical markets. A new sale can take months to line up, only to be wiped out by devaluation or a lack of financing support. But an even greater threat may come from an unexpected low-cost competitor: your own equipment, originally sold five years ago in the US market.

Big Profits in Used Equipment

The importer who buys the used equipment in the US at highly depreciated prices usually finds a receptive and profitable market in Latin America. The profit potential is huge, with mark-ups typically in the range of 80% to 150%. This phenomenon frustrates some manufacturers, but others see a profitable strategy for taking on secondary and tertiary markets with refurbished equipment.