Is resale value really all that important?

[Farmwithjunk]

Whether he is "well ahead instead of buying new" is speculative at best.

This ENTIRE THREAD is speculative at best. It's an interesting topic, no doubt, but calls for an across the board answer for what would be an individual, case by case decision.

Since it was made clear in the original post by Woodbeef that this pertains to "AG tractors", it would depend on (a) how the farm is structured as a business [inc. state/fed tax], (b) how well that farm operation is doing at any given time (c) the particular tractor in question (d) if the tractor is being traded in or sold outright (e) ect, ect, and so on.......

There is no clear cut, carved in stone answer.

In the modern world of leases, $150,000 tractors, and several million dollar per year operating loans, things are different than how I ran my small "pay as I go" operation. And there's still a few of us out there that follow the low overhead road.

Trying to include every possibility in with one set answer will make a rather muddy pool.

In all my years, I never bought a tractor because of its re-sale value if it was one I planned on keeping. I did look at the cost vs. worth at the time of purchase on a few used ones, not knowing how they'd be holding up 5, 10 or even 20 years down the line.

 

[3RRL]

Farm, you bring up a good point.
I did not buy my tractor for resale value but for what it does for me now. I'll deal with getting rid of it later or keep it forever like my other stuff. I've used the same philosophy when buying personal cars, homes and even machinery for my business. The only thing I bought for "resale value" was the investments I made for that purpose, stocks and bonds and my retirement funds. Other than that, I found by immediate use of anything I buy personal or business machinery to make money or use it to accomplish a task far outweighs resale value. I've never been one to purchase real estate such as my home with resale in mind. More importantly to satisfy the needs and lifestyle of my family and myself. Things like that have a way of working out.

My personal opinion of course....I feel those who purchase for resale never really get the same feeling that you can beat the **** out of your equipment, car, tractor or machinery because you're always worried about resale....almost like not really owning it 100%. By using what I bought to make a living, I was very successful and made way more in a much shorter time than as relying on it for resale purpose. I was able to purchase 10 fold many more new items that way. So to me, resale means diddly squat...do you understand what I'm getting at?

 

[Woodbeef]

I think you guys are missing the point. Yes,some Farmers lease these days or do a few year roll-overs but they are the exception. Take a look at the USDA's stats for average age of tractors on farms. Bet you'll be surprised to see how old it really is........

 

[LBrown59]

Resale value means nothing for us since none of our Kubotas are for sale.

They will be some day.

 

[BarryinMN]

3RRL well stated. I have a brother who is 42 and is still confused over the difference between an expense and an asset.

 

[frank_f15]

I think you guys are missing the point. Yes,some Farmers lease these days or do a few year roll-overs but they are the exception. Take a look at the USDA's stats for average age of tractors on farms. Bet you'll be surprised to see how old it really is........

Think you are correct. there are some rather large farms near me and some of their tractors appear to be quite old and well used, But they are in great working condition. Now bear i mind these are not corporations but just larger private farms that have been around for awhile.

 

[Turbys_1700]

Whether he is "well ahead instead of buying new" is speculative at best. First, the obvious, what else is about shot on the tractor? How much more will he have to spend each year to keep it going? How much time, important time, could he miss due to a failure on an old tractor? If he uses it for business, it is fully depreciated now and he gets zero tax deduction for the tractor, work likely has to be done slower to help preserve an old tractor (therefore wasting time) etc., etc., etc.

It's definitely not a clear line as to when to scrap something and when to keep pouring money into it. I guess a lot of it would be personal preference. Myself, I would consider it foolish to spend $3800 on the engine of 30 year old tractor that likely has a worn out transmission, worn out rear end, worn out wheel bearings, worn out steering components etc. Simply put, there are way too many variables to claim that he is "well ahead" by pouring money into an old tired tractor.

Couple of points...
The overhaul included relining of the brakes...
Transmission and pumps are excellent...
The person in question does not make his living farming...
Try to purchase a new 60 HP tractor with the capabilities of his re-built AC...
The cost differential is significant...
We've got older AC D-17's, an AC 8050, and a Ford 860...
All are in good working order...
When it comes time to rebuild...
They will get re-built...
We just don't junk old stuff...
We buy newer to compliment...
I know...
I'm a tractor junkie...

 

[Farmwithjunk]

I think you guys are missing the point. Yes,some Farmers lease these days or do a few year roll-overs but they are the exception. Take a look at the USDA's stats for average age of tractors on farms. Bet you'll be surprised to see how old it really is........

My "big tractor" is 27 years old.
#2 is going on 36 years old.

No..... I wouldn't be a bit suprised.

All the BTO's have new equipment. They make up but a small percentage of farms even though they do work big acreage numbers. The rest of the "small time operators" have to function on a small budget/low overhead. That means keeping older equipment online for a long, long time.


In this part of the world, no-till has taken over in crop farming. The tractors that were bigger "primary tillage tractors" here 30 years ago will pull a planter or drill just as well as a new one. You see more newer tractors on the cattle/hay operations than on the crop operations here.

Kentucky is the biggest beef cattle producer (in the U.S.) east of the Mississippi. There are quite a few of those cattle/hay farms.

This is why all the manufacturers are zeroing in on the compact tractor market. Big AG tractors don't sell in numbers that would keep the doors open at Deere/AGCO/Case-NH/ect.

 

[Woodbeef]

Couple of points...
The overhaul included relining of the brakes...
Transmission and pumps are excellent...
The person in question does not make his living farming...
Try to purchase a new 60 HP tractor with the capabilities of his re-built AC...
The cost differential is significant...
We've got older AC D-17's, an AC 8050, and a Ford 860...
All are in good working order...
When it comes time to rebuild...
They will get re-built...
We just don't junk old stuff...
We buy newer to compliment...
I know...
I'm a tractor junkie...

Just because a tractor is new,does not always mean it has the attributes to fully replace an older one...........Progress does sometimes move backwards in tractor developement.

 

[SkyPup]

They will be some day.

Not in my lifetime, my son and grandson both are getting them for free.....