The 20-Year-Old Excavator: When Is It Still Worth Keeping?

There is a point in every excavator's life when someone asks the question:

“Is this machine still worth repairing?”

It's a fair question.

The machine is old.

The paint is tired.

The cab has seen better days.

The hour meter has a number on it that makes the accountant nervous.

And then something expensive fails.

A final drive.

A hydraulic pump.

A slew motor.

An engine.

A valve bank.

Suddenly someone says:

“Maybe we should just replace the machine.”

And sometimes, they're right.

But here's the problem:

Replacing an old excavator isn't necessarily cheaper than repairing it.

In fact, there are plenty of situations where spending R200,000, R300,000 or even R500,000 refurbishing an older excavator can make considerably more economic sense than spending R1.5 million, R2 million or R3 million replacing it.

At Vikfin, we spend a lot of time around old excavators.

We buy them.

We dismantle them.

We inspect their components.

We refurbish them.

And we put those components back into machines that are still working.

So we have developed a slightly different attitude towards old machinery.

We don't automatically see an old excavator as an obsolete excavator.

We see an asset that needs to justify its continued existence.

And that's a very different question.

The Problem With Thinking About Age

We have become obsessed with age.

A five-year-old machine is considered “good”.

A ten-year-old machine is considered “getting old”.

A fifteen-year-old machine is considered “old”.

And a twenty-year-old machine?

Well, surely it's finished.

Not necessarily.

Consider two excavators.

Machine A

2019 model.

6,000 hours.

Poorly maintained.

Worked hard.

Hydraulics are tired.

Undercarriage is worn.

Cooling system is marginal.

Several electrical problems.

Machine B

2006 model.

14,000 hours.

Well maintained.

Engine is healthy.

Hydraulic system is strong.

Structure is sound.

Undercarriage has reasonable life remaining.

Parts are readily available.

Which one would you rather own?

The answer isn't automatically Machine A.

Because age is only one variable in the economics of machinery.

Condition matters.

History matters.

Parts availability matters.

Application matters.

Expected remaining life matters.

And above all:

The numbers matter.

An Excavator Doesn't Know What Year It Was Manufactured

This might sound strange, but an excavator doesn't care how old it is.

It cares about:

Oil.

Heat.

Contamination.

Wear.

Maintenance.

Load.

Operator behaviour.

And hours.

A machine that has spent twenty years being properly maintained may be in considerably better mechanical condition than a much newer machine that has been abused.

The question shouldn't therefore be:

“How old is it?”

It should be:

“How much useful life does it have left?”

That's the number that matters.

Let's Take a 20-Year-Old Excavator

Imagine you have a 20-tonne excavator that is roughly 20 years old.

It is no longer worth anything close to what it was when new.

Perhaps its current market value, in working condition, is around:

R700,000

It's not pretty.

But it works.

It earns money.

And then the final drive fails.

You receive a quotation for a brand-new OEM replacement.

Let's say it's:

R200,000

Suddenly the conversation changes.

Someone looks at the machine and says:

“We're not putting R200,000 into a 20-year-old excavator.”

Fair enough.

But let's ask a different question.

What is the alternative?

Option One: Scrap the Machine

You dispose of the excavator.

Perhaps you recover some value from the machine.

Let's say you receive:

R300,000

for the old machine.

Now you need another excavator.

A comparable machine might cost:

R1.5 million

Your additional capital requirement is therefore roughly:

R1.2 million.

And you've just replaced an asset that may still have several thousand productive hours left in it.

Was that necessarily the best decision?

Not necessarily.

Option Two: Repair the Machine

Instead, you investigate the repair properly.

The final drive doesn't necessarily have to be replaced with a brand-new OEM unit.

Depending on the machine and the failure, you might have several options:

• Repair the existing unit

• Rebuild the existing unit

• Source a quality used OEM unit

• Source a refurbished OEM unit

• Consider a reputable aftermarket alternative

• Source a compatible component where genuine interchangeability exists

Suppose you find a quality used OEM final drive for:

R80,000

Add installation, oils and associated costs.

Let's say the total repair comes to:

R110,000.

You have just spent R110,000 instead of R1.2 million in additional capital.

And the excavator goes back to work.

That's the economics of asset life extension.

But What If Something Else Breaks?

This is where the argument gets more complicated.

Because the obvious response is:

“Fine. You fix the final drive. Then the engine blows up next month.”

That's a legitimate concern.

And it's precisely why you shouldn't blindly throw money at an old machine.

The objective isn't:

Keep the old excavator alive at any cost.

The objective is:

Determine whether keeping the old excavator alive makes economic sense.

Those are two very different things.

The Five Questions You Should Ask

Before spending serious money on an older excavator, ask five questions.

1. What is the machine worth today?

Not what you paid for it.

Not what you wish it was worth.

What would somebody realistically pay for it in its current condition?

2. What will it be worth after the repair?

This is important.

If the machine is worth R700,000 today and a R150,000 repair gets it back into good working order, the economics may be attractive.

If the machine is worth R300,000 and requires R500,000 of repairs, things look very different.

3. How much useful life is left?

This is arguably the most important question.

If the machine has another:

1,000 hours

left in it, that's one calculation.

If it has:

8,000 hours

left, that's another.

You aren't really buying an old excavator.

You're buying productive hours.

4. What is likely to fail next?

This is where experience matters enormously.

If you know the machine and its history, you can make an educated assessment.

If the engine is healthy, hydraulics are healthy, structure is good and undercarriage has life remaining, repairing a failed final drive may make excellent sense.

If the engine is tired, pumps are weak, slew bearing is damaged, undercarriage is finished and the machine is riddled with electrical problems, you're looking at a different proposition.

5. Can you get the parts?

This one is frequently overlooked.

A machine isn't necessarily cheap to maintain simply because it was cheap to buy.

Parts availability can make a huge difference to the economics of an older machine.

A popular excavator with thousands of units working in Southern Africa may have an enormous ecosystem of:

• Used OEM parts

• Refurbished components

• Aftermarket parts

• Dismantled machines

• Experienced mechanics

• Technical knowledge

An obscure machine with limited parts availability can become a financial nightmare.

The Magic Number: Cost Per Productive Hour

Here's where we think the discussion gets really interesting.

Forget the purchase price.

Forget the age.

Forget whether the machine looks old.

Start thinking about:

Cost per productive hour.

Imagine your 20-year-old excavator requires:

R250,000

of refurbishment.

After the work, you reasonably expect another:

5,000 productive hours

from the machine.

Your refurbishment cost is therefore:

R50 per productive hour.

That's before fuel, labour and normal maintenance, of course.

But now compare that with replacing the machine.

Suppose the replacement requires another:

R1.2 million

of capital.

If the newer machine gives you 8,000 hours of productive life, the capital component is:

R150 per productive hour.

The newer machine has cost you three times as much in capital per productive hour.

And we haven't even considered financing costs.

Depreciation Changes the Equation

There is another advantage to older equipment.

Much of the depreciation has already happened.

When you buy a brand-new excavator, you're buying a machine at the expensive end of its depreciation curve.

When you buy a 15- or 20-year-old machine, you're often buying an asset whose major depreciation has already occurred.

That doesn't mean an old machine won't lose value.

It will.

But the financial pain of depreciation can be dramatically different.

And if you buy an older machine correctly, you may be able to operate it for several years without losing a huge amount of capital value.

The R300,000 Repair That Saves You R1 Million

Let's put a simple example together.

You own an older excavator.

Current working value:

R800,000

It needs:

• Hydraulic repairs: R100,000

• Final drive: R90,000

• Electrical repairs: R30,000

• Cooling-system work: R40,000

• Miscellaneous refurbishment: R40,000

Total:

R300,000

Your total investment becomes:

R1.1 million.

You now have a machine that you reasonably expect to operate for another five years.

The alternative?

Sell the old machine for R500,000.

Buy a replacement for R1.8 million.

Additional capital required:

R1.3 million.

You have effectively spent another:

R1 million

to replace an asset that could potentially have been economically extended for R300,000.

And that R1 million could have been used elsewhere in the business.

More machines.

More staff.

More working capital.

More projects.

More profit.

Capital has a cost.

And smart businesses understand that.

But Don't Romanticise Old Machinery

There is a danger here.

Once you start talking about extending the life of old machines, it is tempting to conclude:

“Old machines are always better.”

They're not.

Sometimes an excavator genuinely is finished.

If the structural integrity is compromised, the engine is beyond economical repair, the hydraulic system is fundamentally shot, the undercarriage is destroyed and parts are becoming impossible to source, throwing another R500,000 at it may simply be throwing good money after bad.

There is a point where economics beats sentiment.

The objective isn't to save the machine.

The objective is to save the capital.

Sometimes the best place for an old excavator is the scrapyard.

And that's actually where Vikfin comes into the story from the other direction.

When an Excavator Dies, Its Parts Don't Necessarily Die With It

At Vikfin, we buy old excavators precisely because the machine as a whole may no longer make economic sense.

But that doesn't mean every component is finished.

A 20-year-old excavator might contain:

• A perfectly serviceable engine

• A good valve bank

• Usable hydraulic cylinders

• Strong final drives

• A good slew motor

• Valuable electrical components

• A useful cooling pack

• Good counterweight and body components

• Usable tracks and undercarriage components

One machine that has reached the end of its economic life can therefore become a source of components that keep several other machines alive.

And this is where the circular economy becomes more than a nice environmental concept.

It's good business.

The Second Life of an Excavator

Think about what happens when an old excavator is dismantled properly.

The original machine might be finished.

But its:

engine

could keep another machine working.

Its:

final drive

could get another contractor out of trouble.

Its:

hydraulic cylinder

could return another excavator to service.

Its:

valve bank

could save another owner hundreds of thousands of rand.

Its:

cooling system

could extend the life of another machine.

Its:

wiring harness

could solve a problem that otherwise might have taken weeks to diagnose and repair.

The machine gets a second life.

Not as one machine.

But as dozens of components.

That's the fundamental idea behind what we do at Vikfin.

Why Used OEM Parts Can Make Older Machines Viable

This is perhaps the biggest economic argument for keeping older excavators in service.

If every component that fails has to be replaced with a brand-new OEM component, eventually the economics become difficult.

But that isn't necessarily the only option.

For many components, a quality used OEM or refurbished OEM part can dramatically reduce the cost of repair.

And there is something else worth remembering:

You're not trying to make a 20-year-old excavator brand new.

You're trying to make it productive and reliable enough to do its job.

Those are different objectives.

If a R70,000 used OEM component can keep a machine working for another 2,000 hours, spending R200,000 on a new component may not make economic sense.

The right answer depends on the machine, the component, the application and the expected remaining life.

The 20-Year Rule Doesn't Exist

There is no magical point at which an excavator becomes uneconomic.

It isn't:

10 years = good

15 years = questionable

20 years = scrap

That's not how machinery economics works.

A 20-year-old excavator with:

• A strong engine

• Good hydraulics

• Sound structure

• Available parts

• A good maintenance history

• Reasonable undercarriage

• A known operating history

could be a fantastic asset.

A five-year-old excavator with:

• Poor maintenance

• Excessive wear

• Hydraulic problems

• Structural damage

• Difficult-to-source parts

could be a terrible one.

The calendar doesn't operate the machine.

The machine does.

The Real Question: How Much Life Can I Buy for My Rand?

This is the question we would encourage every plant owner to ask.

Not:

“How much will the repair cost?”

But:

“How many productive hours will this repair buy me?”

Suppose:

Repair cost = R200,000

Expected additional productive life = 4,000 hours

That's:

R50 per additional productive hour.

Suddenly R200,000 doesn't sound quite so frightening.

And if replacing the machine requires another R1.5 million in capital, the calculation becomes even more interesting.

This is why the repair-vs-replace decision should be treated as an investment decision, not an emotional decision.

There Is Also the Cost of Replacement

When people decide to replace an old excavator, they often compare:

Repair bill

versus

Price of another excavator.

But replacing a machine has other costs.

There may be:

• Finance costs

• Interest

• Deposit requirements

• Registration

• Transport

• Insurance

• Initial servicing

• Operator familiarisation

• Attachments

• Installation of tracking/security equipment

• Lost productivity during the changeover

And perhaps most importantly:

capital tied up in a newer asset.

That capital could potentially be earning a return somewhere else in your business.

Sometimes Boring Is Brilliant

There is another reason we like older, proven excavators.

They are often simple.

The market is full of machines that have been around for years.

Mechanics know them.

Operators know them.

Parts suppliers know them.

Dismantlers know them.

And the aftermarket knows them.

There is enormous value in a machine where somebody can hear a noise and say:

“I know exactly what that is.”

That's worth something.

The Best Machine Isn't Always the Newest Machine

For a contractor or plant-hire operator, the ultimate objective isn't to own the newest excavator in the yard.

It's to own the excavator that produces the best return on capital.

That could be a brand-new machine.

It could be a five-year-old machine.

Or it could be a 20-year-old machine that has been properly maintained and intelligently refurbished.

The badge doesn't determine the economics.

The numbers do.

So When Should You Walk Away?

At Vikfin, we'd suggest being particularly cautious when an older excavator has several major systems failing simultaneously.

For example:

Engine + hydraulic pumps + undercarriage + slew system + structural damage

is a very different proposition from:

One failed final drive on an otherwise healthy machine.

The first may be an economic write-off.

The second could be a very sensible repair.

The trick is understanding the difference.

The Vikfin Approach

Our business exists because we believe there is enormous value hidden inside older earthmoving equipment.

We buy excavators that have reached the end of their useful economic life.

We dismantle them.

We inspect the components.

We identify what still has value.

We refurbish where appropriate.

And we put those components back into machines that still have work to do.

In doing so, we effectively extend the economic life of equipment that might otherwise have been written off.

And that is good for the owner.

Good for the machine.

Good for the parts buyer.

And, increasingly, good for the environment.

The Most Valuable Excavator Might Be the One You Already Own

There is a strange psychology around machinery.

We tend to believe that the answer to an old problem is a new machine.

Sometimes it is.

But sometimes the answer is sitting in your yard already.

It simply needs:

the right diagnosis,

the right repair,

the right parts,

and a little more life.

Before you spend R2 million replacing an old excavator, spend a few hours doing the maths.

Find out what it is worth.

Find out what is wrong with it.

Find out what could go wrong next.

Find out how much the repairs will cost.

Find out what parts are available.

Estimate the productive hours remaining.

Then compare that number with the cost of replacement.

You may discover that the machine you thought was finished still has thousands of productive hours hiding inside it.

And that can be worth a lot of money.

The Vikfin Bottom Line

We don't believe every old excavator should be kept alive.

Some machines have genuinely reached the end.

But we also don't believe that an excavator becomes uneconomic simply because its age is printed on a registration document.

Age is not an economic calculation.

Condition is.

Parts availability is.

Repair cost is.

Downtime is.

Remaining productive hours are.

Residual value is.

And ultimately:

Return on capital is.

So the next time someone tells you:

“That excavator is 20 years old. It's time to replace it.”

Ask them one simple question:

“Compared with what?”

Because a 20-year-old excavator that costs R300,000 to refurbish and gives you another 5,000 productive hours may be a much better business decision than a two-year-old excavator that requires R2 million of capital.

At Vikfin, we don't just believe in giving old excavators another chance.

We believe in making the numbers work.

Vikfin — Flexible. Fast. Friendly. Affordable.

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