I stumbled across some very interesting data today…auction sale prices on good condition JD 8360R Tractors now vs 5 years ago (2015).
Not much $$ difference.
HIGHEST AUCTION PRICES THIS YEAR ON JD 8360R TRACTORS
HIGHEST AUCTION PRICES 5 YEARS AGO (TROUGH MAY) ON JD 8360R TRACTORS
Here’s link to Machinery Pete Youtube video of the 2013 JD 8360R with 1059 hours, IVT, ILS, sold for $221,000 on 3/7/20 farm auction in Mendota, IL by Sullivan Auctioneers: https://www.machinerypete.com/media_posts/sondgerorth-farm-retirement-auction-yesterday-in-mendota-il
Lot of folks been surprised at how strong buyer demand has been so far this year on good condition used Tractors, given all the economic headwinds in ag.
So the question becomes…Why the strong demand and strong auction sale prices?
2 of the underlying factors involved, one everyone agrees on, the other often overlooked:
1. RISING price of New equipment continues to pull UP on value of good condition Used. All heads out there nod in agreement to this truth, which has been in effect all 30+ years I’ve been compiling auction sale price data. It’s just become increasingly pronounced as the cost of New has escalated into the $$ stratosphere
2. Currently lower level of late model used inventory stuck on dealer lots. This is especially true if we remember back to late 2013, 2014, 2015 into early 2016. Back then there was WAY too much late model used equipment stuck on dealer lots all around North America. Of course that time period was coming off the Go, Go, Go Days of 2008 - early 2013 when the ag space was comparatively printing $$ with elevated commodity prices and sales of New equipment roaring and tons of folks buying new iron to a great degree to minimize taxes through IRS Sec. 179 immediate write off. When that merry go round of good times began to slow down quickly Spring of 2013 when commodity prices fell hard…farm equipment dealers were collectively stuck with a very high level of traded in late model equipment. It took dealers 3+ years of very hard work, with steep $$ loses taken, to pare down that excess late model used equipment inventory, particularly Tractors, Combines and Sprayers.
A LOT has changed since then in the dealer space.
Namely the breathtakingly fast pace of farm equipment dealer consolidation. Used to be 4-8 location dealerships buying up the 1-2 store locations. That was then. This has been now…12-20+ mega store location dealer groups buying up other large 8+ store location dealer groups, or pairing with similar size giant dealers. So we’re left with far fewer but much LARGER dealer groups. These new larger dealer groups are well capitalized and they take a much different approach to handling their used equipment inventory vs the old model of far more but smaller dealers. The mega size dealer groups of today are very data driven and programmatic in how they move their used inventory. This vs the old way that saw far more, far smaller dealer ownership groups who could not afford to bite the bullet, swallow hard and move those 5, 10, or 15 excess large late model Tractors, Combines, or Sprayers stuck on their lots 5 years ago. It was common for dealers to be financially underwater up to $50K+ per Tractor/Combine/Sprayer back when the market slowed down Spring of 2013. It was extremely difficult for those smaller dealers to absorb the $$ hit they were staring at per used unit stuck on their lots.
So they sat. And sat.
I think lot of folks kind of still feel like that old reality is still in place, but actually when we talk today with dealers we work with at our www.MachineryPete.com web site, many of them indicate being in a much better position now in terms of level of used inventory. In fact earlier this Spring I had 2 dealers tell me separately…“Pete, if you could get us more _____ we’d sell 'em in a heartbeat.” What they usually are referring to is 5-10+ year old Tractors.
So perhaps not too surprising to see that aforementioned 2013 model JD 8360R with 1059 hours sold for $221,000 on the 3/7/20 farm auction in Illinois, while 5 years ago a then 1-year old 2014 model 8360R with only 296 hours sold for just $210,000 on a 5/30/15 farm auction in North Dakota.
That was then. This is now.
Need to point out however, that this trend is on the good to excellent condition used tractor models. Of course not every used tractor sold at auction is in pristine condition. Far from it. Which is why we see the extreme buyer demand for the nicest condition units as they come available. Here’s a look at the bigger picture average auction price data on JD 8360’s going back over the past 6 years, with High & Low sale price for each calendar year.
AVG. AUCTION PRICE ON JD 8360R TRACTORS
- Data by www.MachineryPete.com
"Tractor Specs" on JD 8360R’s: https://www.machinerypete.com/specs/john-deere/8360r/7710
Link to (105) JD 8360R’s for sale today: https://www.machinerypete.com/tractors/175-hp/john-deere/8360r
Pete
Machinery Pete
www.MachineryPete.com