Is a spike in tractor prices coming?

[Hozzie]

I don't know if it is going to get worse or not, but I am pretty confident it isn't going to get significantly better. Although new prices are up, so are used prices. In some cases even more than new.

I decided it was a good time to sell my MX5800 and order a new M7060 Cab. It was of course always going to cost me more, but I am not sure in the end that I paid significantly more in difference after all is said and done than I would have a year or two ago. Add in 0% and it makes it even closer. My dealer did not charge a significant upcharge for the 0% (about $700) so it made sense to use their money.

The biggest factor today seems to be when you may get something. Luckily the dealer was able to change an existing lot order to my specs so hopefully it is here within the 90 days they think it will be. They seem to be pretty confident it will be even sooner but I don't want to get my hopes up.

 

[mo1]

With shortages on all kinds of things, it seems logical to expect some degree of price hikes on tractors and related. A good guess is that the first of the year will see tractor prices rise. What do others think?

Price increases are absolutely going to happen, if for no other reason than there is very significant inflation. The "official" federal government figure which looks at only a portion of the economy as a whole puts inflation at a 6.2% annual rate for their most recent figures. Looking at other sources to judge inflation, the USDA increased food stamp payments by 27% to recipients and the price of a gallon of 87 octane gasoline has increased 63% in the Midwest from $1.95/gal to $3.17/gal in the last year according to the federal Energy Information Administration. So, there will be a price increase and it will likely be somewhere in between the "official" figure and the increase in energy prices. Price increases due to shortages would just add to the price increases due to inflation.

How much they rise will be due to how much the cost to manufacture the tractor increases, which depends on increases in raw and finished material prices and the cost of labor, as well as elasticity of the tractor market, which is how much they can get away with raising prices before demand drops off excessively. Anybody that can accurately predict that more likely than not works in the industry and knows the numbers, the rest of us can just guess. My personal guess is that we will see the same 10-20% increases in tractor prices that we have seen in most other segments of the economy excepting energy.

 

[sixdogs]

A better description of what I mean is looking at current market adjustment price hikes, the result of transitory inflation expected to go away when all the covid, labor and bottleneck problems are resolved. Prices should then come back down is the way this is being thought of.

But let's think about that. I've noticed some companies have raised their suggested retail prices, a clue that makes me think industry is beginning to look at the current transitory inflation as evolving into permanent and it's time to raise sticker prices. That means set in stone as suggested retail, not temporary and the new starting point for buyer negotiations.

Tractors might see 10% to maybe 15% higher sticker prices from the factory. If so, tractor buyers would then be negotiating from a higher base and even 0% and a modest discount would still be much higher than tractors are right now. Point is, if I was sitting on the fence this might be a good time to firm things up.

 

[Snobdds]

The only way inflation will subside is when the fed shrinks the money supply. The fed increased the money supple by over 20% in one year, which means prices will settle around 20% higher indefinitely. That is just simple economics.

The problem I'm seeing is, prices are over shooting that 20% inflation figure by a long shot. This means prices will settle higher than 20%. There is going to be some pain ahead and I hope people aren't over leveraged.

 

[bigtiller]

I've always heard ... "A man can never own too many chainsaws." Maybe the same thing applies to tractors?

Chainsaws? Tractors?
My budget is screwdrivers.

 

[hornett22]

I bought my Mahindra in March of 2020. I've heard there have been at least 2 price increases since.

 

[dodge man]

The first thing I noticed is the lack of dealer discounts and manufacturing rebates. I feel lucky I bought my tractor about three years ago and got about 10% off of “list” price. That went away first then the list price most likely went up sometime in the last year.

 

[jwmorris]

I think anytime supply is lower than demand, prices go up.

The more money the .gov prints, leaving the gold standard in the rearview mirror, the less each dollar is worth.

Print money and give it to people that didn’t earn it and they will be more likely to spend it on things they don’t really need, contributing to both of the above.

We have all three going on right now. There is no way to avoid higher prices on everything, unless we change direction.

The .gov’s cure for a $40 bill at a fast food joint, is to force the owner to pay his lowest employee more money, so they can buy goods, at the inflated prices they have caused.

As you might have guessed by now, this also raises the price of things because (sucsessful) businesses are not going take their eye off the bottom line. Up the cost of each employee and everything you sell, leads to only one thing, higher selling prices. This is despite supply shortages or demand.

 

[rScotty]

I think anytime supply is lower than demand, prices go up.

The more money the .gov prints, leaving the gold standard in the rearview mirror, the less each dollar is worth.

Print money and give it to people that didn’t earn it and they will be more likely to spend it on things they don’t really need, contributing to both of the above.

We have all three going on right now. There is no way to avoid higher prices on everything, unless we change direction.

The .gov’s cure for a $40 bill at a fast food joint, is to force the owner to pay his lowest employee more money, so they can buy goods, at the inflated prices they have caused.

As you might have guessed by now, this also raises the price of things because (sucsessful) businesses are not going take their eye off the bottom line. Up the cost of each employee and everything you sell, leads to only one thing, higher selling prices. This is despite supply shortages or demand.

That almost sounds like a complaint. What's the good side? There has got to be one.

After all, the government is just all of us collectively, so ultimately it does what the bulk of the people want.
I think that is how a democracy is supposed to work.
It's not perfect, just better than anything else.
rScotty

 

[Texasmark]

With shortages on all kinds of things, it seems logical to expect some degree of price hikes on tractors and related. A good guess is that the first of the year will see tractor prices rise. What do others think?

Neighbor bought a 48 hp Branson smaller chassis...forget the model number back in January and on a trip back to the dealer for something nebulous, he found out that they had just jacked the prices up $1k on his model tractor and that was back then. With everybody changing price tags on their store displays nowadays, with a 6.7% inflation gauge at the end of October, surely it's a sign of the times. SS is up 5.7% COL for 2022 but Medicare will probably eat that up.