Is there "tractor bubble" out there?

[E_Sanborn]

My understanding of a "Bubble" is an economic environment that encourages rising prices due to speculation, or the perception of increasing demand past the time horizion.

Don't see this in my region (Central Texas) In fact, I purchased a gray-market Yanmar 6 months ago in large part because I simply could not find any good used (newish) iron in any acceptable condition, for any acceptable price. The number of used CUT and SCUTs seen was remarkably low, given a large farming and ranching community, and their condition was invariably poor. The pricing on those units, well, let's just say..surprising.

If hard economic times linger, then (used) pricing will drop somewhat, driven by supply and demand. But I don't see any pricing of new iron past MSRP; don't see any big discounts either.

 

[greggh]

I think it's too early to tell. Congress hasn't got their act together and even if they do, it's not understood if the markets are going to respond. It looks as if the people are disappointed in the financial institutions at this time. The trust has gone out of the banking sectors so how and when will the trust return, if ever.

 

[riptides]

The banking sector does not trust us, and we don't trust the banks. No money or credit moves between the two parties.

Pretty scary.

 

[Kyle_in_Tex]

It could happen. Here's what happens in some situations. I can't speak for all the different brands. If people cant' buy them, they sit on the lot. The dealers end up having to get a "floor" loan and finance them themselves as the manufacturers will only allow a "set" time period before it must be financed by the dealer. Usually 6 months. Prior to the end of the 6 months, the dealer gets antsy and lowers his profit margin to help sell it. If the situation is such that he can't sell it, he doesn't order any more from the factory and so the manufacturer has to start offering incentives to keep them moving. This could happen to tractors and if it does, it will happen to the brands that "stock" the most machines on a lot (provided they don't sell).

 

[BleedGreen]

The AG business is very strong. Infact, there are many pieces of equipment that your having to wait several month to get. We've seen Case actually canceling some retail orders because they simply can not fill them. This is going to impact pretty much everything over 50Hp. The AG business is a large part of the compact tractor market, RTV market, and Diesel ZTRs.

Having just been at the Kubota dealer meeting, this is a regional thing. I'm in a pretty healthy area of the country. Our sales have nearly matched last year. Dealers in the south seem to have been harder hit. Its all where you live.

Absolutely, Neil - the AG side for us is way up over last year. The early order program for 2009 JD combines sold out in several weeks - if we have a retail order for one right now, and cannot fill it from our stock orders it will end up being a 2010 product. As you said, most other true AG units are months out on a new retail order. Overall we are up over last year, thanks to AG, while CUTs are even from last year, (although slightly lower margins) unfortunately, premium lawn & garden is horrible - everyone is listening to the national news, and how crappy everything is - but it is not crappy everywhere. In truth, our area has been healthy; with low unemployment and a housing market that at worst, is flat - but not dropping. I have several contacts in the Phoenix AZ area - nothing is going well down there at all. I am glad to hear your aread is holding it's own, Neil.

 

[Gary Fowler]

I cant see any "tractor bubble" bursting. Prices have continued to climb albeit at a good slow rate. The bubbles form when prices escalate radically not due to material cost but mostly greed fueled by easy loan money from unscrupulous bankers. Tractors dont fit in that category at least in my area. The reason you will see a lot of used ones is because folks will buy them do a project and then sell them off for as much as they paid. I bought a greymarket tractor also, because I didnt want new and was planning on keeping it for a long time. All the used tractors I found (and I looked for months ) were priced nearly as high as new compact tractors. Many of them had over 6000 hours and paint was all gone, seats torn up, oil leaks everywhere and still wanting more than what they cost new 30 years ago. Many listing for nearly as much as new today. I dont think you will get any tractors cheaper than they are now, if anything, I think they may be headed for a upturn on the price as more and more folks return to the land. The baby boomers are all retiring now and many of them like myself no longer want to fight big city issues. Most of us are not rich but are not strapped for cash either so we have the money to lay down for these tractors and equipment. I think you will pay at least 4-5% more every year and possibly more if we dont get control of our national oil and stop depending on foreign oil.