I agree, and a very interesting thread.
1- "I sold it after 5 years and got what I paid for it!"
2- "Used tractors generally have better price structure"
3- "New tractors have a warranty"
First, at 2%/yr inflation average for the "I got what I paid for it" crew basically says that you would have needed to get 10% more than you paid for it to call it that.
Also, if you look at the last two years in that mix, the numbers would change....
For a 5 year old machine bought new 7 years ago and traded or sold at 5 years, you would have inflation of 3 years at 2% , and then 1 year at 8% and one year at 7%... ( avg inflation/yr for the last 5 years.)
That's 6% + 8% +7% or a total of 21% more than you bought it for 5 years ago to claim you got what you paid for it.
For a $20,000 machine 5 years ago that machine would need to fetch $24,200.
In the case of a machine bought beginning of 2020:
2020 - 3%
2021 - 8%
2022 - 7%
Or a total of 18% more than you paid for it to say you got "what you paid for it".
In this case let's look at an actual purchase of $52,500 paid for a new premium machine with a backhoe bought in beginning of 2020.
One would need to fetch $61,360 this year for that 2020 machine purchased for $52,500 to make that claim.
So to validate these numbers I looked up the exact tractor purchased in 2020 for $52,500. That same machine with the same options today is $59,000 list price.
So in theory, you would need to fetch about $2360 MORE than the cost of buying a brand new machine in order to make the claim that you "got what you paid for it".
Not to mention that you now are comparing a machine that has 3 years on it with 0/4 year warranty, with a NEW machine with 2/7 year warranty. (2 year bumper to bumper + 7 year drivetrain).
Having gone through this calculation one can deduce that "getting what you paid" for something is usually fought with incomplete financial consideration.
Now, looking at a dealer trade.
The dealer would actually need give you 4.0% more ($2360 more) for your tractor or $61,360. That's more than a new tractor of the same flavor ($59,000).
This should seem counter intuitive, and it is.
The dealer would make nothing on the deal, and the next buyer would be paying more than new. Cash or financed $ on the deal. A dealer trade even if you traded it in on the NEW $59,000 machine, the dealer would need to give YOU a $2360 discount on top of that retail price to make your trade-in match the "I got what I paid for it" groups claim.
Now let's look at a private party buyer over a dealer for that same machine.
Given the option of purchasing a 3 year old machine from the "I got what I paid for it" folks, the buyer would need to be paying $61,360 ($2360 more than the $59,000 retail for the same machine, new today) for a 3 year old machine with xxx hours on it, and with a few years left in the drivetrain warranty, and without possible Mfg financing benefits, in order for the seller to claim "I got what I paid for it".
Everything is fungible here. It has to be. There are conditional deductions or additions to value for care of or lack thereof, damage, or anything that could generally move the trade-in or resale value up or down.
But in general, it may be that the realities of inflation on the "I got what I paid for it" scenario is pretty weak in many if not all instances. It may be more of a subjective statement over reality as it relates to the time value or future value of money.
