Eyeing a big dealer auction
"Are you crazy?"
J.D. Manning, GM of Dean Ag Services, a Caterpillar dealer with five ag locations in Missouri and Kansas (7 overall), told me today he's been getting that question a lot lately from folks. Why? Might have something to do with their upcoming July 21st absolute online auction at www.Purplewave.com.
25 late-model combines up for sale on this auction. Did I mention it was an "absolute" sale? All those late-model combines and tons of other equipment up for sale, all going to the highest bidder. We're talking millions of dollars worth of inventory on the line here. Hence the "Are you crazy?" questions Manning has been getting.
On the contrary, I'd suggest Manning and Dean Ag Services is actually being very smart taking this aggressive approach. The bottom line name of the game in the implement biz is keeping that iron flowing, both new and used. When the used stuff starts to stack up on the lot, not good. When it's also beginning to stack up on every other dealer's lot.
Really not good.
As I've been writing and blogging about for some time now, that is the current situation with late-model combines. So, what to do? Age old question in the equipment business. Do you sit and wait it out, hope that things get better? Or do you move to clear your lots via the auction route and expose your inventory to what the market will bear?
Why do I think it's a smart move to act aggressively with a sale like this? Because sitting back and doing nothing doesn't come without a price. You're going to miss on future opportunities with your cash flow and lines of credit line all tied up. Being hamstrung isn't exactly fun or good business either.
When these large dealer auctions pop up, I'm always asked by folks, "so what's the deal on this sale? Why are they selling? Why all the late-model stuff? Are they high hour non-local machines? Is this really an absolute auction?"We already touched on the absolute factor, yep, with www.Purplewave.com, it is absolute. Here's the inside scoop on this July 21st dealer auction, from J.D. Manning himself, GM of Dean Ag Services."We were heavy in the ag rental business the last six or seven years," said Manning. Because of that we've accumulated quite a lot of inventory. There's somewhat of a glut of used inventory on dealer lots and we're just trying to get out in front of the curve with this sale. It's all about turning it over."So, the combines, tractors and other equipment on this auction?
"90 percent of the equipment on the sale is rental equipment," said Manning. "It's all been in the field working, on rent, all local deals."
Take a look at the equipment lineup on this sale, good quality stuff:
As you peruse the list of equipment on this auction, look for the little video camera symbols at the bottom of the item description. If you see the video camera, click on it and you can actually watch that combine or tractor in action, see it move, listen to it hum. So the Gleaner R65 combine with only 1,042 engine hours on this auction, from Dean Ag Services' Maryville, MO store, click on this link and you can watch a 2:12 video of this combine.
Manning stressed that Dean Ag Services has a strong, on-going long term commitment to the ag side of the business. "Ag is a core component of Dean Machinery. Last year we doubled our sales of new Lexion combines. We doubled our sales of new Agco combines. Our new tractor sales were up 22 percent."So they aren't going anywhere. This auction is a means to clean up the used side of their equipment ledger and position themselves for future growth.
Of course I will be most interested to see what everything sells for, that's my gig, compiling sale prices on every type of equipment. Last Friday (June 30th) I did a "live" running blog on my Machinery Pete Facebook page during Ritchie Brothers huge sale in St. Louis, MO. 32 mostly late-model combines sold on this absolute auction. I thought sale prices held up pretty well. See for yourself:
From a buyer's perspective, there is another very interesting angle to the July 21st online auction at www.Purplewave.com for Dean Ag Services:
While the Missouri River hasn't directly affected any of Dean Ag Services stores and the local crops in western Missouri are looking good according to Manning, the fact remains that local folks have a LOT on their minds, dealing with a historic flood kind of pushes a lot of business decisions like buying used equipment to the back burner.
So, perhaps the potential for non-local bidders to jump in and get a buy? We'll see.
If you're not familiar with www.Purplewave.com, check them out. Located in Manhattan, KS, Purplewave.com held its first internet auction back in 2002. In 2010 Purplewave.com conducted 130 internet auctions with 19,000 assets selling for $50 million dollars. They have always been very upfront about buyer's fees on their internet auctions, an easy to remember across the board 10% fee.
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