Expected Depreciation in Used Tractors?

[Hodado]

I’ve always tried to see what local dealers are selling used tractors for and then buy from a private seller for less.Generally anything with a good loader on it holds value well

 

[BnRidge]

Now, you have me wondering how many people take inflation into account when referring to past events and was this a good deal?

No one does. A 1971 deere 4020 is now averaging $20k. Originally 10-12k. That original money has inflated now to $70k, but ask anyone and the depreciation is nill, and it has really held its value, like it's some kind of investment.

 

[rScotty]

A good lengthy recession might sort things out a bit. Unfortunately Governments like massive inflation because it magically makes their debts and foolish spending smaller.

Yes, I agree with part of that. A lengthy recession would be good; it's what we probably need to have happen to save the economy from itself. Of all the possibilities, a long recession just might be the most benign. That and some reduction on gov't spending would restore some of the economic health.

Enough inflation to trigger a recession is the goal... but not too much. The problem there is that when inflation goes up the government risks having to borrow at higher interest rates to fund their own bond purchases. Then it can go bonkers.
rScotty

 

[sunandsand]

Bought new (Kubota 2601 + FEL + belly mower + rotary cutter) because a) I can depreciate it, b) I got 0% financing with zero down, c) because I really don't know a heck of a lot about tractors (but learning fast) and am not qualified to assess good one vs. bad one, d) I needed it to go to work NOW, not after I learned to fix whatever might have been wrong with a used one, e) warranty!!!!, f) I didn't want to get sidetracked into another "project" - I have enough of them right now.

To be honest, I bought a tractor not because I wanted a tractor, but because I needed some land cleared, then mowed, then pallets unloaded, etc. etc. The tractor is a tool, the fact that I enjoy using it is a side benefit. It has paid for itself a dozen times over, and that is just so far. There are times when having your own tractor is like finding a thousand dollars in your wallet that you didn't know about.

It is like a camera - nobody buys a camera because they want a camera, they only buy a camera because they want photographs.

YMMV.

Best regards,

Mike/Florida

 

[rScotty]

No one does. A 1971 deere 4020 is now averaging $20k. Originally 10-12k. That original money has inflated now to $70k, but ask anyone and the depreciation is nill, and it has really held its value, like it's some kind of investment.

For that price it would have to be a decent JD 4020 with everything working right and in decent shape... But they are not only out there, several shops are making a living refurbishing those old 4020s.

So it seems like it really was a good investment. And why shouldn't it be? The industry hasn't changed all that much, the tractor did 50 years worth of valuable work which has to be included, and you can't buy anything near that good for that money today. Plus there is an active used market.

What I wonder is this - If the industry had made real progress since 1971, would that old tractor still be as good an investment?
I kind of think it would be, because the work it does hasn't changed.

rScotty

 

[Atlfinfan]

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.

I've bought 2 new tractors in the last 10 years+- because I am not mechanically inclined......at ALL, so I need the warranty. Also, because of that, I have to worry WHY person is selling a used machine. Could be it has problems I won't notice.
I sold the first one with the house we had. 17 acres of pasture and some woods. I didn't think I would need another one where we were moving to, 7 acres of woods. Sure wish I had the first one back. 36 hp vs 25. I guess, once you have a tractor, you can't live without one.

 

[BnRidge]

the tractor did 50 years worth of valuable work which has to be included

Yes, this is where the money is. But that's usually omitted when talking buying and selling. It's more fun to say I bought one year, sold it later, and "made money" on the transaction, when that may not be (probably isn't ) the case. That 4020 cost 50k just to keep it around based just on resale value. Whether or not it made money other ways is a for the accountant to figure out.

 

[Sodo]

For desired models the value is rising faster than inflation. And the older tractors don’t have infuriating electronic systems.

 

[bdhsfz6]

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!

Obviously age and condition will dictate how much a tractor depreciates. In my case, it's hard to judge actual depreciation. I've owned 7 Kubota tractors over the last 45 years. Each was purchased new with a trade. In every case, I got what I paid for the tractor in trade in value. All were garage kept and in excellent condition with less than 1200 hours.

 

[88bradb]

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.

View attachment 774696

These are current on going auctions.
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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.

I believe the prices posted on tractordata.com are without a loader. (Something to keep in mind)