Expected Depreciation in Used Tractors?

[BryceSteiner]

Seeing the post this morning about the decline of the new tractor market made me think.
What is the expected deprecation of used tractors?

How much per year or per hour can you expect your equipment to lose in sale value on the used market?

I'm sure it matters if you are picking up a JD or Kubota vs other brands like Kioti, TYM etc. What difference does that make on a used sale?

Would it be fair to say that you lose 30% the first year just because of the dealer costs?

If you are picking up a used tractor from a dealer vs a private party how much more would you pay?

Did people who bought in late 2020 to mid 2022 potentially lose out if they were expecting to sell now because of the loosening of the market?

Hopefully this makes sense. I appreciate your thoughts!

 

[jwmorris]

All of my tractors are old enough, they could sell today for more than I paid for them.

With the .gov induced inflation, seems like it doesn’t even have to be very old anymore.

$17k was new price.

These are current on going auctions.

If you are picking up a used tractor from a dealer vs a private party how much more would you pay?

However much the dealer has to mark it up to cover operating costs, overhead, etc. vs the guy that just wants to sell a tractor, not trying to make a living.

 

[WinterDeere]

@jwmorris already gave a good answer for older equipment. Likewise, in my own (admittedly limited) experience, I've never sold any tractor for less than I paid for it, nor have any of my family or acquaintances who are close enough to share such info with me. That includes CUT's, garden tractors, and even one lowly lawn tractor.

But on newer machines, one potentially-related thing I have noticed is the way that off-lease and other newer second-hand auto pricing follows unemployment and the economy in general. There's always demand for cars (and tractors), and it seems that when the economy takes a turn for the worse causing new vehicle sales or prices to slump, the used market always spikes. I actually bought a new truck in 2005, during the automotive "crisis" of that decade, for only 10% more than the used pricing I was finding on 2003's at the time. It was the only time I ever actually bought a new pickup truck, as the pricing on used cars had gone up so much as to force my hand, at that point.

A third point worth noting is the effect that COVID-related parts shortages had on the used car market, assuming this may have also bled into used tractors. I was watching 2015/16 SRT Chargers and Challengers sell in 2021 for more than the price I had paid new in 2016... for a five or six year old vehicle! There was demand, and nearly zero supply... pricing followed.

 

[hornett22]

I haven't seen prices go down yet. Seem to be holding steady.

What I have seen is purses and wallets snapped shut and people spending less. Mostly I'd say it's due to the "build back better" dumpster fire. Housing prices are still high here but they're not selling 2 seconds after hitting the market. Those coming soon listings have stopped.

People are still expecting to get top dollar + for everything, reality just hasn't hit them yet.

 

[Carl_NH]

Depreciation on used tractors if bought privately is nil or very low 1-2% annually if bought in decent condition and then well maintained over the years. The biggest depreciation IMO is how weil they are taken care of, storing outside etc,

If bought from a dealer, it will lose more value the first year then drop off.

 

[IndyIan]

I assume as more new tractors are available at dealers, then used prices will drop a bit? I think the days of buying tractors and pickups new and trading even the next year are over for now. Buying what you need, and then keeping it in good shape is still probably the best bet for resale. I keep mine under cover, so no weathering at least.

 

[arto98607]

All of my tractors are old enough, they could sell today for more than I paid for them.

With the .gov induced inflation, seems like it doesn’t even have to be very old anymore.

$17k was new price.

These are current on going auctions.

However much the dealer has to mark it up to cover operating costs, overhead, etc. vs the guy that just wants to sell a tractor, not trying to make a living.

There has been almost 40% of inflation since 2007 / 08 so $17,000 back then would be close to $24,000 today's money.
$17,000 price was probably just the tractor without the front end loader.


I think it's important to buy the right tractor in the first place and if used do any repairs needed and stick with it for the long run.
That applies to most things in life I suppose....

 

[Observer82AB]

Seeing the post this morning about the decline of the new tractor market made me think.
What is the expected deprecation of used tractors?

How much per year or per hour can you expect your equipment to lose in sale value on the used market?

I'm sure it matters if you are picking up a JD or Kubota vs other brands like Kioti, TYM etc. What difference does that make on a used sale?

Would it be fair to say that you lose 30% the first year just because of the dealer costs?

If you are picking up a used tractor from a dealer vs a private party how much more would you pay?

Did people who bought in late 2020 to mid 2022 potentially lose out if they were expecting to sell now because of the loosening of the market?

Hopefully this makes sense. I appreciate your thoughts!

Why (Unless needed for the tax deduction) would anyone buy anything new? Serious question. I've bought new before but the best buys are always used.

 

[crashz]

Warranty, lack of used stock, used prices actually more than new (that happened to me with my recently purchased truck), condition of used (for many years new trailers were just more financially sound considering the maintenance needs on used ones) vs new, appearance and "branding", business related expenses (taxes, immediate need, etc).

 

[jaydee325]

We're in unprecedented times. Old rules on depreciation are not applicable at this time.

The pendulum has swung to extremes. We had a period of undersupply, which caused, in some cases, a full recovery of any depreciation and also some appreciation. Now, demand seems to be slowing, but depending on emissions equipment, or lack thereof, prices are moderating on some equipment and staying steady or still remaining strong.

IMHO, getting back to expected norms of pre-covid is still aways off. Due diligence is more important than ever.

 

[WinterDeere]

Why (Unless needed for the tax deduction) would anyone buy anything new? Serious question. I've bought new before but the best buys are always used.

I bought my 3033R new. Reasons were that the cost really wasn't an issue, I was able to order it with exactly the options I wanted, I'm too picky about condition and appearance, and I didn't need to waste time hunting for a good used specimen. At the time I was working a job that left me very little free time, and our income was at a level where time was worth more than the few dollars saved by going used.

But I've been on the other side of that fence more than once in my life, conditions change with time and circumstances.

 

[jezreel]

Depreciation in Used Tractors. . . That’s a Good One. Not in today’s Crazy Days.

 

[jwmorris]

There has been almost 40% of inflation since 2007 / 08 so $17,000 back then would be close to $24,000 today's money.

Now, you have me wondering how many people take inflation into account when referring to past events and was this a good deal?

 

[6701michiana]

I believe the panic is over. I have begun looking for a nice CUT and see both options available. Been to several dealers, can buy one new, they have stock or few years old or older older ones that may need a few things.
There are still some ads for some brands like JD and Bobcat smaller units for mid 35k when new is way less. Good luck with that cause I still see them for sale weeks later.
But on Facebook Marketplace I see prices being slashed as they are not selling for crazy anymore at least in Midwest.

 

[hornett22]

Why (Unless needed for the tax deduction) would anyone buy anything new? Serious question. I've bought new before but the best buys are always used.

Because I didn't want to buy something that someone like my former neighbor used to own.

He basically had a battering ram with a seat. He also like to go twenty feet and shut it off piddle for 30 seconds and hop back on and start it again. He'd take his lawn mower in the woods to mow down sapplings and then bring it over asking why when he engaged the blades it stalled. When I'd say your blades are bent and jammed into to deck, he'd say, oh, they must be defective. It's under warranty, I'll have the dealer come and get it.

 

[mikester]

Why buy used when you can buy new?

https://www.marketbook.ca/listings/construction-equipment/for-sale/list/category/1046/loader-backhoes/manufacturer/kubota/model/m59

Used older ones are selling for more money now than I paid for brand new. Good condition used ones are like finding sasquatch.

 

[WinterDeere]

Used older ones are selling for more money now than I paid for brand new. Good condition used ones are like finding sasquatch.

Asking, or actually selling? I see a lot of crazy asking prices on cars, some people confuse those for selling prices, in casual conversation.

 

[mikester]

I managed to find a new UTV last year. Used were going for new prices. A year later my dealer asked if I'd like to sell my unit for more than I paid for it.

I guess I am confused. Doesn't make much sense to me.

 

[WinterDeere]

I managed to find a new UTV last year. Used were going for new prices. A year later my dealer asked if I'd like to sell my unit for more than I paid for it.

I guess I am confused. Doesn't make much sense to me.

Supply and demand. They have more buyers than units available to sell. Same thing happened with cars in 2021, I had a buy-back offer on our 2020 Durango R/T, for exactly what I had paid for it a year earlier.

 

[mikester]

Supply and demand. They have more buyers than units available to sell. Same thing happened with cars in 2021, I had a buy-back offer on our 2020 Durango R/T, for exactly what I had paid for it a year earlier.

A good lengthy recession might sort things out a bit. Unfortunately Governments like massive inflation because it magically makes their debts and foolish spending smaller.