Any type of vehicle depreciation is dependant on the following:
1. Average annual change in new vehicle pricing
2. Market impression of reliability / durability
3. Mean cost to repair the type of vehicle once out of warranty
Having been in the off-road equipment manufacturing industry for 11 years, I've seen the following depreciation trend on tractors:
1. While still in warranty period, the hours are the greatest influence of resale. Most potential consumers feel that if they can pick up a machine and shake it out with a portion of warranty in place, they are safe.
2. Once out of warranty, age and hours will reduce the resale roughly the same amount.
3. Once a new style model comes out (major new model, not just a BX2350 to BX2360 type upgrade), the old model will take a drop in resale.
So, looking at a BX2350 as an example, here's what I predict is the average midwest depreciation:
0. On the lot - tractor has cash price of $13,500
1. Drive off the lot - tractor loses 10% of its value in the first 25 hours of operation. Tractor worth $12,150
2. In the 3 year warranty period, tractor loses additional 25% of its value. Hours may swing this up or down about 7%. - Tractor worth about $8700.
3. When tractor is 5 years old, it is worth about 60% of what it was purchased for (including attachments). Tractor worth about $8000.
4. When tractor is 10 years old, it is worth about 40% of what it was purchased for. Tractor worth about $4000
5. When tractor is 20 years old, it is worth about 20-30% of original purchase
. Tractor worth about $3000
I'm not considering the 'oh man my brother sold his 25 year old Kubota for as much as he paid new' stories. I'm talking about taking a 10% sample of the tractors sold in the midwest, and what they are selling for on the market.
My 2 cents,
IowaAndy