8N/Depreciation

StoneHeartFarm · Jun 14, 2001

Okay, so I'm reading Muhammad's book and I hit the part about depreciation...

It got me wondering at what point depreciation stops being a concern. So, does anyone know the cost of an 8N when it was NEW? Around here, you can pick them up for anywhere between $2,500 and $4,000 depending on attachments and condition. I've seen some with shiny paint jobs and no attachments that were running about 4K. It occurs to me that these machines are over 40 years old, and are probably selling for just about the cost when they were new.

Anybody got any old pricing information?

SHF

Will · Jun 14, 2001

The list price was $1200 back in 1952. Of course with about 50 years of inflation that's a lot more than the current selling price. With some of the old standard tractors, like 8N's or Farmall Cubs they stopped depreciating long ago. If you keep them running, the price goes up a bit every year. In fact, since so many people use the Cubs for mowing, the price goes up in the spring and then down a bit in the fall.

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Here's a link with pricing info on Kubota B series tractors.

StoneHeartFarm · Jun 14, 2001

That's about what I was figuring for the initial price. So, this begs the question: At what point will the compact tractor stop depreciating and either level out or start back up?

SHF

RickB · Jun 15, 2001

$1200 year 1952 dollars are worth about $7800 year 2000 dollars. That means an 8N sold last year for $3500 is worth less than 1/2 its original cost, after inflation.

Will · Jun 15, 2001

<font color=blue> At what point will the compact tractor stop depreciating and either level out or start back up?</font color=blue>

That's got to be very hard to say. Part of resale value is availability of parts. So you need to start with a tractor that sold well. Then you need to pick a model that ages well (unlike those tricycle looking old Ford's). If everyone gets real safety conscience in the future (unlikely) maybe tractors without ROPS won't be worth much. Then you need to pick a model that is known to last. So suppose you've done all this (and I hope by buying Kubota that I have done this), then what's the resale price?

I'd guess that the resale price of a good tractor is somewhere between 50% of (purchase price + inflation) and 80% of (purchase price + inflation).

I'm just making this stuff up, but I hope someone who actually knows will speak up.

Will

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Here's a link with pricing info on Kubota B series tractors.

Wheeldog · Jun 15, 2001

<font color=blue>I'm just making this stuff up, but I hope someone who actually knows will speak up.</font color=blue>

Will,

When Muhammad gets around to adding a "Personal Motto" to our Profiles, would it be okay if I borrow this?/w3tcompact/icons/smile.gif/w3tcompact/icons/smile.gif/w3tcompact/icons/smile.gif

Rob

JonLeonard · Jun 20, 2001

I dont think depreciation should be considered on tractors like the old Fords that are used for non-commercial use. For example, think about your house, you bought it for $100,000 dollars, sell it for 110,000 dollars. You made a profit right?

People dont typically think they bought a house for $100,000 20 years ago and adjusted to current dollars thats $200,000. So, when it sells for 110000 feel like they lost $90,000 do they?

Hope that makes sense.

The way I look at it is...I bought something I needed...I used it ALOT...and I sold it for more than I paid for it. Now thats profit! With tractors that seem to be very easy to do, or at the very least only loose a small percentage of its cost. Same goes for houses, unless the market changes in your area, you almost always sell a house for more than you paid for it.

StoneHeartFarm · Jun 20, 2001

Actually, I have to agree with JonLeonard. If I buy a tractor today for $15,000.00 use the heck out of it for 40 years and resell it for $30,000.00, I HAVE made a profit. What I have done is made 15,000 in interest on the investment during the time of my ownership. If the rate of inflation has made the original investment now equal to $60,000.00, it would appear that I have had 50% depreciation. My original 15k is still there. Plus the additional 15k in interest. The interest rate hasn't kept up with inflation (but it wouldn't in a bank savings account either), however, this is offset by the use I have had of the tractor. Every dollar that I didn't have to pay someone else to come move a pile of dirt for me. So, adding the original 15k to the 15k in interest and then adding in the estimated savings by owning the machine, it will equal the replacement cost for a new tractor. (30k/40 years=$750.00 per year).

Whatcha think?

SHF

Youare · Aug 15, 2001

I have owned an 8N for almost 20 years, paid about $2,500.00 for it then. In 20 years I have changed the tires once, (still in good shape today) replaced the exhaust system and done a few tune-ups. Today the tractor could be sold for $3,500 - $4,000 in this part of New Hampshire.

I looked at purchasing a 1985 Ford 1710 w/FEL with 1100 hours on it one month ago. The dealer wanted $9,800.00 for it, it needed new rear tires which they would not replace at that price. Another man I know has the exact same tractor with less than 500 hours which he siad he would sell me for what it cost him new $9,500.00. In 16 years the 1710 tractor actually gained a few hundred dollars in value.

My question was, what was the 16 year old Ford going to be worth in another 15 years and what would I have to replace/repair over that time. Was I buying that tractor at the pinnicle of it's worth and in 15 years it would be worth considerably less than the purchased price.

I ended up purchasing a new Kubota L3000DT 4WD w/FEL for about 50% more than the used one. I have a pretty good idea that in 15 years it will be worth close to what I paid for it, plus I will have gotten the best 15 years of it's life. Not to mention all the work I will have done with it that I didn't have to pay someone else for. I kept the 8N too, how can you part with a classic.

Randy

Anonymous Poster · Aug 15, 2001

His 1710 did not gain value over 16 years. You have to remember that the value of a dollar in 1986 is not the same as it is today. According to the Woodrow Federal Reserve Bank's Consumer Price Index, to recover the purchase price of $9500 (1986 dollars) he would have to sell it for $15,715.49 (2001 dollars). Therefore, if you bought it for $9500 today he would lose 40% of its original value.