Used tractor market tight as a drum
Bet you weren't expecting to read about flat panel TVs when you clicked on this story about the used tractor market were you?
Bear with me. Yesterday (June 20, 2007) I read a piece online talking about how electronic retailers were taking a huge hit in their quarterly profits due to the rapidly falling sale prices on flat panel TVs. Ths followed the familiar pattern we saw years ago with declining sale prices on PCs, notebook computers, VHS and DVD players.
Seems manufacturers of flat panel TVs were overly optimistic and produced too much inventory. When sales fell flat last year, manufacturers dumped the excess inventory on the market.
Retailers were forced to slash, slash and slash prices some more. They lost, big time, while consumers won by paying less to get their flat panel sets.
Now let's segway from TVs to farm equipment. Remember back five, ten years ago when every implement dealer had a slug of new tractors, combines and planters sitting on their lots ready to go?
Not like that anymore, is it?
Farm equipment manufacturers learned their lesson the hard way. The same way flat panel TV manufacturers are learning now. Excuse my language here, but it sucks when supply and demand gets out of whack and you're on the wrong end. Profits evaporate, losses pile up, sale prices drop.
As I said before, only the consumer wins in that scenario.
Well, things have definitely changed. Take the used tractor market. Tighter than a drum in mid 2007. Want proof? Okay, how about this. Tuesday of this week (June 19, 2007) a 1997 John Deere 8100 mechanical front-wheel drive tractor (160 hp) sold on a farm auction in north-central Iowa. It was a nice tractor with 2,220 hours. What did it sell for?
I went back through our auction sale price data 11 years and found only eight John Deere 8100s out of 227 we've seen sell, bring more money. That's really quite amazing. Click on the link below to pull up all 227 auction sale prices on John Deere 8100s and see what I'm talking about.
What's more amazing is that most of those eight John Deere 8100s that sold for more money sold long ago and had far fewer hours. Like the 1997 model John Deere 8100 with only 784 hours in excellent condition that sold for $72,500 back on February 6, 1998.
So nearly 9 1/2 years later we see the same model year tractor, not one year old anymore, but now 10 years old with 1,436 more hours sell in close to the same area for only $750 less?
Are you struggling to figure out why used tractor prices and used farm equipment values in general are skyrocketing? Look no farther than the harsh law of supply and demand. More folks are looking to buy and there's less available inventory, whether on dealer lots or the open auction market, to choose from.
Bottom line: Used tractors are worth more.
Click here to download a PDF with expanded auction price data on John Deere 8100 tractors.