/ Expected Depreciation in Used Tractors? #1  

BryceSteiner

Bronze Member
Joined
Sep 9, 2021
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82
Location
Antwerp, Ohio
Tractor
RK25 T25
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!
 
   / Expected Depreciation in Used Tractors? #2  
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.

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These are current on going auctions.
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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.
 
   / Expected Depreciation in Used Tractors? #3  
@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.
 
   / Expected Depreciation in Used Tractors? #4  
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.
 
   / Expected Depreciation in Used Tractors? #5  
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.
 
   / Expected Depreciation in Used Tractors? #6  
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.
 
   / Expected Depreciation in Used Tractors? #7  
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....
 
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   / Expected Depreciation in Used Tractors? #8  
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.
 
   / Expected Depreciation in Used Tractors? #9  
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).
 
   / Expected Depreciation in Used Tractors? #10  
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.
 
 
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