New Tractor Sales Are Declining

[rScotty]

The dealer always assumes the buyer has that tactic up their sleeve.
These people aren’t stupid.

No, it doesn't work like that. Nobody is stupid. It is just that there is a difference in the way people who work for themselves look at the world. You seem to know that. Well, it works that way for the rest of us too.
rScotty

 

[rScotty]

I agree. In my experience, small dealers that don't move much product tend to purchase outright while the large dealers moving tons of units will use a flooring plan.

I think that is what is the way I see it as well. There is a point where dealers have to make a decision about expanding or not. Frankly I preferred to stay small enough that I owned my whole business and could make my own policies. But not everyone is going to feel that way. It's just a personal preference.
rScotty

 

[Hay Dude]

No, it doesn't work like that. Nobody is stupid. It is just that there is a difference in the way people who work for themselves look at the world. You seem to know that. Well, it works that way for the rest of us too.
rScotty

You have a lot more faith in humanity than I do.
I have been around for a long time and stupidity is apparent just about everywhere.
In fact, it was just released that IQ levels are falling now in the USA.

 

[5030]

You have a lot more faith in humanity than I do.
I have been around for a long time and stupidity is apparent just about everywhere.
In fact, it was just released that IQ levels are falling now in the USA.

Probably from smoking too much dope..........

 

[rScotty]

You have a lot more faith in humanity than I do.
I have been around for a long time and stupidity is apparent just about everywhere.
In fact, it was just released that IQ levels are falling now in the USA.

Don't know about the IQ part. I feel smarter now than last year but how would I know for sure?

Yes, my "faith in humanity" bias as been noted before by several TBNers.
All I can say is it's as valid as pessimism; just less common.
rScotty

 

[Sid Post]

These manufacturers aren’t stupid enough to give you the lowest price and finance you for free for 5 years. Anyone who thinks so is fooling themselves.
I credit the manufacturers for playing games with people like that. It makes them feel smart, like they took advantage of the manufacturer.

Any business has to make a profit to stay in business. You may see them temporarily move things at a loss to move dead stock or solve temporary cash shortages but, these are fleeting and generally rare because they are so harmful to the company's financial health.

We all know good brands that took these shortcuts to move products and then either DID NOT have the resources to invest for the future or, simply burned customers by devaluing products previously purchased.

 

[MossRoad]

Regardless, you take the loan or pay cash. But there is no significant cost reduction for cash.

Many years ago I was selling a used car for $1000 firm as advertised. A guy came to look at it and said "I'll give you $900 cash right now!"

I said "Cash as opposed to what?" He just looked at me. Awkward pause.

I told him I really need to get $1000 and can't take anything less. He said OK and gave me $1000.... cash.

 

[Sid Post]

There probably are narrow number of situations where a dealer wants to move something and the customer gets close to invoice and 0% financing, but for the vast # of typical buyers, 0% interest means paying more invoice. OR you pay higher interest and get a lower price.


Next people will be saying the paid invoice, got 0% for 5 years and got retail trade in money for their trade-in.

Come on fellas, these aren’t multi-billion dollar corporations because they are philanthropists to their customers.

I was part of this CIRCUS with General Motors working for a GM subsidiary. I could get a new Chevy pickup at "COST"!

Problem was, I could buy a new Chevy or Ford at retail for less money equipped the same!

 

[5030]

No businessman will remain in business very long if they aren't making a profit. Just common sense.

 

[jyoutz]

And likewise, there is no 0% interest AND significant reduction in price.

No, but all Kubota dealers have the same corporate financing deal. I shopped different dealers and found significant price differences between them. I bought at the lowest priced dealer within reasonable distance, then took the corporate financing. I found as much as $4000 difference between dealers for the same machine.

 

[5030]

I was part of this CIRCUS with General Motors working for a GM subsidiary. I could get a new Chevy pickup at "COST"!

Problem was, I could buy a new Chevy or Ford at retail for less money equipped the same!

So was I actually and 'cost' versus real cost when dealing with vehicles are 2 entirely different animals. Employee pricing is just a come on in reality. The automakers happily stick it to everyone, why I never buy new. Always off lease. I let the original purchaser take the hit. Have no issue with not having that new car smell....lol

 

[5030]

No, but all Kubota dealers have the same corporate financing deal. I shopped different dealers and found significant price differences between them. I bought at the lowest priced dealer within reasonable distance, then took the corporate financing. I found as much as $4000 difference between dealers for the same machine.

That is correct and applies across all brands and sizes. Financing is usually based on volume sold and the debt to repossession ratio.

 

[Hay Dude]

No, but all Kubota dealers have the same corporate financing deal. I shopped different dealers and found significant price differences between them. I bought at the lowest priced dealer within reasonable distance, then took the corporate financing. I found as much as $4000 difference between dealers for the same machine.

Of course there is. That’s capitalism. Our system of free enterprise allows dealers to undercut each other on price so you get the best deal.
If we had a different system, you’d pay the same price wherever you went and it would be higher than the lower price you found.

 

[Sid Post]

Regardless, you take the loan or pay cash. But there is no significant cost reduction for cash.

With interest rates being so low, the only real financial risk is repossession for non-payment or rising interest rates on long-term financing.

Cash payment upfront makes more sense with higher interest rates. Long-term <4% rates for most encourage them to do different things with cash upfront to generate income in tractor terms or buy farkles in terms of homeowners or hobby ranchers and farmers.

 

[5030]

Be patient, interest rates are climbing monthly. In my situation, APR means nothing as I write it off anyway. Just ordered a new implement and never inquired as to the finance rate because for me it means nothing.

 

[Sid Post]

But the interest rate discussion brings up some good points. With interest rates rising like they are, any company offering financing has to consider that in their package they can offer you.

If they didn't they wouldn't be in business very long and you wouldn't want to buy a tractor from there anyways.

So you might see slightly better deals on cash purchases then you would have even 8 months ago. Because someone has to deal with that higher interest rate and it isn't going to be them.

Right now, I'm getting offers for a $5K cash rebate for cash payment or $1500 to $3000 cash rebates for financing at 0% for 24 months to 3.9% for 84 months.

With long-term interest rates being a bit volatile, 3.9% on a tractor could be a good 'investment' return for some people and companies.

 

[Hay Dude]

But the interest rate discussion brings up some good points. With interest rates rising like they are, any company offering financing has to consider that in their package they can offer you.

If they didn't they wouldn't be in business very long and you wouldn't want to buy a tractor from there anyways.

So you might see slightly better deals on cash purchases then you would have even 8 months ago. Because someone has to deal with that higher interest rate and it isn't going to be them.

I think rising interest rates will force dealers to sharpen their pencils, but then all your savings gets gobbled up with higher interest!
Cash is always king in our system. It’s always better to “buy once, cry once”, BUT and its a very BIG “but”, most people can no longer pay cash for these large ticket items in this economy and not with high inflation far outpacing incomes.

 

[Hay Dude]

Right now, I'm getting offers for a $5K cash rebate for cash payment or $1500 to $3000 cash rebates for financing at 0% for 24 months to 3.9% for 84 months.

With long-term interest rates being a bit volatile, 3.9% on a tractor could be a good 'investment' return for some people and companies.

If you have your money in a 4% interest earning MM account, then 3.9% isn’t too bad.

 

[Hay Dude]

Right now, I'm getting offers for a $5K cash rebate for cash payment or $1500 to $3000 cash rebates for financing at 0% for 24 months to 3.9% for 84 months.

With long-term interest rates being a bit volatile, 3.9% on a tractor could be a good 'investment' return for some people and companies.

Also, to accurately gauge if that is a good deal, you need to know your starting point. $5,000 sounds like a lot, but what if the dealer is starting at $10,000 over invoice to begin with? Then it’s not such a great deal.
Just sayin!

 

[jyoutz]

Of course there is. That’s capitalism. Our system of free enterprise allows dealers to undercut each other on price so you get the best deal.
If we had a different system, you’d pay the same price wherever you went and it would be higher than the lower price you found.

Yep, but all gave the same corporate financing.