The great upgrade debate (long)

[n8wrl]

Your target L3540 (or bigger) doesn't seem like a big enough jump to justify the trade. I went from L3130 to L5030 with just about the same number of hours as you and I think it was a very good call. But my main problem was pulling a 6' bush-hog so as to cut wider than my tires. Couldn't really do that with the 3130 up hills and in the scrub.

I think I have to agree with the crowd - as much fun as it would be, get a few more hours on your 3400 and keep shopping. That's fun too!

-Brian

 

[Kyle_in_Tex]

Upgrade? Most of the machines you are looking at are slightly more optioned tractors with slightly more HP.

An upgrade to me would be for one of the machines you're looking at WITH A CAB!!! You need one for the cold and I need one for the heat and cold. I just can't afford it right now because I was stupid and stayed in manufacturing 25 years ago when I had a chance to get out. (Another long story, JDCAN can explain)

Otherwise, common cents (pun intended) tells me you don't want a $4000 whack in the pants just yet.

Let this be a lesson to everyone else. Do your research. Go $4000-8000 over budget now and get the tractor of your dreams and enjoy it for the rest of your life. This way, you won't ever have to get bit by the upgrade bug..If you do this you'd better get the cab with the reclining seat as the spouse may have you sleeping in it.

 

[swampvol]

I agree with the last three posts.

If you're needing a 6ft hog for your pasture, the 3400 is plenty capable.
If you are going to upgrade.....then UPGRADE.

I'm 38 and can see myself going through the 3400 and another tractor before my time's up. I figure by the time I'm 50 or so I will want and deserve the luxury of a cab w/ac, telescopic hitch and some more umph....if I got it now I would have nothing to look forward to.

 

[canoetrpr]

And, at 58 hours and a year old, you say the Kubota has went through most of it's depreciation. I think you're way off here.

Hi Roy.

Thanks for the sensible thoughts. Can you clarify this point you brought up for me.

I was basing this on what is being offerred to me as a trade in value and what the dealers themselves have been tellng me. I'm being offered $16.5k-$17.5k pretty consistently and new is about $21.5k. Thats about 25% lower. I can't for the life of me find anything used around here less than $15K in the 30 or so hp range with a loader - that is less than 10 years old and less than 600 hours.

I would have imagined that the after say another 3-4 years and say another 200hrs it would be hard to justify too much lower than 25% in depreciation. I know that when I was looking for used, late model low hour machines were snapped up pretty quick in a private sale anyway.

 

[DmansPadge]

With only that many hours in a year... it doesn't sound like you need to upgrade. I would expect somebody that needs a bigger tractor to have at least several hundred hours on it in a year. If you want to upgrade... go for it!! But if you only put 58 hours on your "small" tractor in a year I think it would be hard to justify it.

Enjoy!

 

[canoetrpr]

Wait a second... has my wife been talking to you guys about this?

In all seriousness, I appreciate all your thoughts and I expect that I will be doing the sensible thing and waiting (or else getting a cab that I can sleep in!).

FWIW, now that I have had a chance to try out the GL 3xxx series side by side with the L3400, I'd say that there seems to be quite a difference in the tractors - physical size alone. HP is only a single measure. Though I do agree that when I do go bigger it will probably make sense to look at the GL 4x40 or GL5x40 or similar.

 

[RoyJackson]

Hi Roy.

Thanks for the sensible thoughts. Can you clarify this point you brought up for me.

I'm basing this upon an informal study I did when looking to upgrade from a Deere 670 to a machine with more PTO HP. The little 670 did all I wanted, but didn't have adequate HP for a chipper.
Although I had focused on Deeres, they weren't the only machines I was looking at (NH TC-30 and Kubota B7800 were solid contenders).
Anyway, the results were (for the Deeres) was maximum depreciation was after about 5 years of the models I studied. These machines were all used and 1990-2000 models (this study is about 3 years old now). I didn't include any tractors with more then 1000 hours.
I did not break it down to percent depreciation per year. I just looked for when the price curve stopped dropping and flattened out.

After reading your post, I calculated what my current machine's depreciation was from new. I bought a 2003 model in mid 2004. The original price was ~ $15500 and the sale price was $12500 (leaving out sales taxes) which comes to about 20%...not too far from your numbers for the Kubota.

So...it appears the sweet spot for selling is about 5 years (for the models I looked at). The tractor value has dropped about as much as it's going to and you won't be competing against newer models with better financing.

Now, this is totally unscientific and the sample size was pretty small (and all models were in the mid-Atlantic area).

BTW, since I never bought the PTO chipper and the amount of acreage of brush cutting I was doing (to justify the 790) has decreased, I'd been better off sticking with the 670.

Anyway...that's what I did. Although this was based upon Deere prices, I think it's fairly safe to project this informal study across the board, at least with Deere, Kubota and New Holland.

I'm really surprised the Kubota's depreciation was that much (~25%) in the first year. I didn't expect it to be that much.

 

[IslandTractor]

First of all, I agree with your wife, she sounds like a very reasonable woman. Also, you haven't given any compelling reason to move from low thirty horsepower range to larger and the fact that you've only put on 50 some hours in a year implies that you can easily manage the tasks at hand with the L3400. That said, I'm in a similar position but have decided to upgrade. So, when you approach this issue again, I suggest you take a slightly different tack.

First important step: get the wife to think you need a new and bigger tractor, you poor dear. In my case I took on some serious additional acreage through volunteering for our local land conservancy organization. Area to be mowed and otherwise cleared of brush and weed trees jumped from 5 to approx 20. Second, I went out and started working on the additional acreage with my highly capable but too small Kioti CK20 and returned from the battle scene with all manner of supportable complaints, injuries and damage....all related (clearly) to having a too small tractor. Third, I jumped (quietly) when she suggested that I might need a larger tractor to do this work and still have time for the family etc. I did not need a second discussion on the topic and considered her suggestion to be all the permission a guy ever needs. Upgrading for the sake of the family! Sweet. Fourth, I decided to double the tractor size (power), not just make an incremental change. Bottom line is that I should be getting a new Kioti DK40se HST with bigger mower, BH90x and a few other toys later this week and will trade in my trusty and efficient CK20 TLB. I'll double horsepower, more than double FEL lift capacity and double weight. Of course I need to trade or sell almost all my current implements --keeping the QA grapple and tree boom but the rest will be upgraded so that is an additional expense. In my case the depreciation on the Kioti CK20 TLB trade was less than 18% after two years/180hrs of ownership so that was not too hard to accept. Overall it seems to me a worthwhile upgrade that is perfectly justified by the promise of increased family time. Not sure about trading seat time for dish duty but a man has to be willing to make sacrifices...

I'm not sure you need a bigger tractor based on prior discussion but if you do I'd certainly suggest looking at the 40+ hp size as there really wouldn't be enough difference between the 35hp L3400 and a 37-40hp GL tractor to justify such a move. I also looked at the same tractors you did and for me, a current Kioti owner, it was simply a no brainer. Much more bang for the buck with the new DK line. This is a tractor not a sports car so "fit and finish" was way down the list in importance to me and was certainly not worth the almost $10K extra for an equivalent size Kubota or JD set up. Fit and finish on my CK20 has been generally excellent so I don't see Kioti as lacking in this area even if one could point out some advantages with the other orange or green brands.

 

[canoetrpr]

Anyway...that's what I did. Although this was based upon Deere prices, I think it's fairly safe to project this informal study across the board, at least with Deere, Kubota and New Holland.

I'm really surprised the Kubota's depreciation was that much (~25%) in the first year. I didn't expect it to be that much.

That is a sensible analysis Roy. Thanks for sharing. I'd have to agree that the 5 year mark sounds like a sensible point to trade/sell if one were going to.

I haven't really tried to bargain at all on the trade so this might be a reason why I'm being quoted that much of a knock. All though I did have one dealer tell me that If I told him what I wanted and he found a customer who was looking for a new L3400 and would want to save a couple thousand on a barely broken in machine, he could contact me and that way both deals would happen - he'd be able to sell my trade right away and I'd get a good price for it and he'd get a deal from me on a GL tractor.

So far he's been the fairest of the dealers I've talked to around here. I never did name him a price but I think that loosing no more than $2K on the new price would be reasonable. I know that I would have jumped at a 57hr year old tractor for $2k less and I'd throw in my toothbar to boot.

There is something else that occurs at around the 5 year mark IMHO - particularly in favour of 'economy' models. New models come out and used buyers don't necessarily know what the difference in MSRP was between the economy models and the ones with more luxuries. Not many used buyers look at a 30 hp tractor and want to pay much more for the economy L vs. standard L.... regardless of whether or not I think it would be worth while. I think that economy models benefit from this as they don't depreciate as much as the non economy ones do. At the end of the day as a used buyer I was just comparing basic capabilities of tractors in the same HP range - that I could drag a 5ft bush hog with. Something like HST vs. non HST will make a difference in value but past that other features tend to depreciate fast. Maybe I'm wrong but that is what I noticied anyway.

All in all very sensible advice overall. Thanks.

I think that the sensible course of action is to re-look at this another 4 or so years from now and see if it makes sense then.

 

[RoyJackson]

There is something else that occurs at around the 5 year mark IMHO - particularly in favour of 'economy' models. New models come out and used buyers don't necessarily know what the difference in MSRP was between the economy models and the ones with more luxuries. Not many used buyers look at a 30 hp tractor and want to pay much more for the economy L vs. standard L.... regardless of whether or not I think it would be worth while. I think that economy models benefit from this as they don't depreciate as much as the non economy ones do. At the end of the day as a used buyer I was just comparing basic capabilities of tractors in the same HP range - that I could drag a 5ft bush hog with. Something like HST vs. non HST will make a difference in value but past that other features tend to depreciate fast. Maybe I'm wrong but that is what I noticed anyway.

I agree with your assessment on the options or creature comforts depreciation. Since (IMHO) they're mostly sizzle (and no steak)...new sizzle looks better then used sizzle. So the guy looking for sizzle will go after the newer machine.
From a "quality" standpoint, creature comforts add cost, but not much value. That's even more applicable when used (as the buyers are a different type). Of course, "value" can be quite an intangible attribute.
Simple machines don't cost as much...but I don't think most buyers of the 790s, TC-30s and B7800s will lose as much (simply because they didn't pay as much initially).
Now, a caveat... The lesser known brands depreciation may be pretty steep. Although they may have been around for years, they haven't been in this US (or North American) market for years. Until Kioti, Mahindra or others reach the name recognition of Deere (probably not going to happen) or Kubota (may happen), they just won't have that resale value. Not in my opinion, anyway...

I should do my informal study again in 2010...just to see if the hypotheses hold up...I'll put that on my calendar.