Depreciation between the tractor brands on trade or resale

[old and tired]

...I’m not a big believer in buying something because it holds its value....

I buy things that have a good reputation for not breaking down, it just so happens, that it's also why they hold their value.

I'm a firm believer in you get what you pay for... (from a cheap old bastard - which should have been my screen name!!!!)

 

[Grandad4]

It's difficult to claim that a higher depreciation results in money lost over the long term, unless the initial outlay is identical.

Let me illustrate with a concocted example.

Tractor A cost $30k, and over a period of 10 years, it will lose 40% of its value, so it will be worth $18,000.
Tractor B cost $25k, and over a period of 10 years, it will lose 50% of its value, so it will be worth $12,500.

At the end of the 10 years, you look at this and say "Tractor A is worth 5500 more than than tractor B, and only cost 5000 more, so I came out $500 ahead!"

However, if you had put that initial "extra" $5000 saved in a simple savings account that returns 1%, you'd actually have $5526 in that account after 10 years, or you would've been $26 ahead by getting tractor B. Obviously, if you were actually going to invest that $5k, you should be able to manage more than 1%.

Or, since you're on TBN, you would've been able to buy $5k more attachments for tractor B, which after 10 years are probably still worth a decent chunk and you would've been able to get a lot more

It's difficult to claim that a higher depreciation results in money lost over the long term, unless the initial outlay is identical.

Let me illustrate with a concocted example.

Tractor A cost $30k, and over a period of 10 years, it will lose 40% of its value, so it will be worth $18,000.
Tractor B cost $25k, and over a period of 10 years, it will lose 50% of its value, so it will be worth $12,500.

At the end of the 10 years, you look at this and say "Tractor A is worth 5500 more than than tractor B, and only cost 5000 more, so I came out $500 ahead!"

However, if you had put that initial "extra" $5000 saved in a simple savings account that returns 1%, you'd actually have $5526 in that account after 10 years, or you would've been $26 ahead by getting tractor B. Obviously, if you were actually going to invest that $5k, you should be able to manage more than 1%.

Or, since you're on TBN, you would've been able to buy $5k more attachments for tractor B, which after 10 years are probably still worth a decent chunk and you would've been able to get a lot more work done.

All takes is for the numbers to shift some... not 50% and 40% residual, not a $5000 (20%) penalty for buying a "premium" tractor, and the math can be very different. You did say those were "concocted" numbers, it's probably worth also saying that "real world" numbers may not always work out the same way.

Ps: Sorry for double posting! Dunno how that happens, but I hate my "smart phone"!

 

[fried1765]

I agree with Ning, although, over the last ten years, investment returns have been in the 10 to 20% range, so his 1% return number is totally unrealistic.

That means the fool that bought the premium tractor lost his shirt, while the cheapskate that bought the upstart made out like a bandit, all other things being equal.

Furthermore, the cheapskate that bought the upstart could have bought a lot more tractor with the same outlay. That more capable tractor would do a lot more worn over the ten year period.

Either way, buying something that’s not price competitive is a losing proposition.

A combination of misinformation and oversimplification here.

 

[Williy]

Since March 2021 I have seen the price of tractors steadily
going up and the attachments are right behind them for price. At the rate the LS tractor company is getting dealers
I do believe that their prices will increase drastically over time Just as the price of everything else is going up.

willy

 

[Torvy]

I buy things that have a good reputation for not breaking down, it just so happens, that it's also why they hold their value.

I'm a firm believer in you get what you pay for... (from a cheap old bastard - which should have been my screen name!!!!)

I am the same, but I want data, not reputation for not breaking down. Ford Trucks have a great reputation, but the data does not support it. I like to think I am frugal, not cheap.

 

[paulfun9]

If I spend 20,000 and sell for 18,800
If I spend 30,000 and sell for 28,200

Do I say one has a higher resale value or is it a perceived value?
Which one actually cost me more to own?

 

[jeff9366]

If I spend $30,000 and sell for $28,200 ~~ Kubota and Deere with 65% - 70% compact tractor market share.

For Kubota and Deere having a comprehensive offering of "matched" implements and attachments increases revenue stream per tractor sold for years. Not forfeiting the established customer who now wants a 100-horsepower tractor is another advantage.



If I spend $20,000 and sell for $18,800 ~~ LS, Kioti and Branson with 10% compact tractor market share.

LS, Kioti and Branson are handicapped by only having compact tractors in the USA product line. It takes a talented capitalist to keep the doors open at a regional brand with a limited product line during tough times in the compact tractor market, which can dry up during recessions like 2008-2009.

From my experience in the wine business and from observing the compact tractor business, few "private label" agreements last longer than ten years.

 

[paulfun9]

If I spend $30,000 and sell for $28,200 ~~ Kubota and Deere with 65% - 70% compact tractor market share.

For Kubota and Deere having a comprehensive offering of "matched" implements and attachments increases revenue stream per tractor sold for years. Not forfeiting the established customer who now wants a 100-horsepower tractor is another advantage.



If I spend $20,000 and sell for $18,800 ~~ LS, Kioti and Branson with 10% compact tractor market.

LS, Kioti and Branson are handicapped by only having compact tractors in the USA product line. It takes a talented capitalist to keep the doors open at a regional brand during tough times in the compact tractor market, which can dry up during recessions like 2008-2009.

That line of attachments is also overpriced. Which is why so many look at me and say, “I don’t understand how you can afford all those attachments”

 

[murphy1244]

I bought my Kioti cause it was the best deal out there and it never been to the dealer for service. I can now sell it very close to what I paid for it.

 

[fried1765]

I bought my Kioti cause it was the best deal out there and it never been to the dealer for service. I can now sell it very close to what I paid for it.

I bought my used (2006) L48 TLB just 27 months ago, and comparative used L48TLB sales data today shows a sale value increase of 25%+.
Amazing/crazy!
I bought a 2014 MB E-350 (bought used 01/2020), and it also shows a value per NADA that has risen by 25%+.
Amazing/crazy!