DonaldP
Gold Member
Hey Big,
These are un charted waters here. Entering into recessionary territory will bring uncertainty in many things. With inflationary control comes the dive into lower Sales of everything from comfort food to comfort cars, homes, and even tractors.
I stopped into Tractor Supply last evening. The manager knew I had cash... I was buying a ton of pellets, some dog treats, and some misc. goods. He made sure to let me know that he had "specials" in a number of departments, obviously trying to move product to maintain sales goals that are most likely showing some erosion as of late due to the feds changes in monetary policy. But, my point is currently there is discounting of general merchandise to ease the initial discomfort to the retail stores that will grow to encompass all durables, autos and tractors. All of that even though the pent up demand from the COVID years of 2021 and 2022 haven't yet been satisfied! That's what makes this so interesting!!!!
We are entering a recessionary mode off of a non completed demand cycle brought on by an external supply side shortage!!! You can't make this stuff up!!! Amazing ....
Last year folks would just whip out a credit card and make an impulse buy for a sale item. Not this year. At 24 to 30% for credit this year, that should be a big fat No, and the retail market is feeling that. Add to that the increase in the price of energy for heat and electricity, food, and durables... even rent and healthcare... well the big squeeze is on, and discretionary spending is taking it on the chin in a V E R Y BIG way!
In the months (or years ahead) we will see vendors in ALL levels of retail making concessions in their prices in order to move material.
So how will this impact both new and used tractors? Think about it...
If no one is buying or demand goes down the Mfg's may implement heavy discounts IF they have inventory that starts to build up. In turn that will drive DOWN the price of used tractors.
There is a squeeze here though for tractor dealers as one of the big benefits they could offer in the past was 0% interest....
It would seem that is no longer going to be a tool on the work table for the manufacturers to use to help move product. Sooooo... again they would have to build onto discounting of the retail price even MORE to spark sales instead of 0% interest.
That will drive down the retail of new, and the value of used as well... those two price variables are connected at the hip.
All that's left is determining the timeframe for this to play out. It will most likely be a curve, or even a harmonic waveform that, like a clocks pendulum, swings onto opposite sides of its swing until it finds an equilibrium.
So prices could go down in a year, then go up, but not as much, in another 6 months, then go down again (but not as much), until an equilibrium is reached in 3 to 5 years.
I guess timing is your friend if you're buying or selling, and timing will be based on your flexibility to hold (even though you may want a new tractor at a specific time let's say "spring") or be able to move (IE: you have the cash and are holding it for the right time if you are paying cash- or if your financing, the timing of your trade value AND interest rates are both in your favor.
In short it's really not something we can actually plan for in todays financial markets. It could all be based on one's need and the ability to wait or move instantly if required.
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