I've been doing this almost 30 years now...tracking auction sale price data.
Used to be fairly rare to see farm retirement or estate auctions featuring lot of very late model, 1-3 year old farm equipment. Just didn't happen that often.
Now it's common.
Very.
To try and validate the extent to which this has changed over the years I got playing around with the search filters in our Machinery Pete Auction Price Data today. First up I said show me auction sale price data so far here in 2019 on just 1-3 year old equipment items. Our http://www.MachineryPete.com Google heat map tool returned this visual look at the concentration of WHERE we've seen 1-3 year old equipment sold at auction so far in 2019...pretty interesting look:
So lots of 1-3 year old farm equipment been sold at auction here in 2019, pretty much all throughout the eastern 3/5 of the U.S. Feels about right from my perspective of daily monitoring the flow of auction sale price data on all types of equipment sold. As I mentioned before, feels like WAY MORE of this 1-3 year very late model equipment items showing up for sale vs years ago.
But how to quantify exactly how much more?
No prob, our http://www.MachineryPete.com Auction Price Data can be sliced that way too. So I dove in and filtered and sliced up all our data every which way and came out with a study looking the raw No. of 1-3 year equipment items sold at auction from January 1 of each calendar year through May 25 of that calendar year. What I found was fascinating. Indeed WAY more 1-3 year old equipment items selling at auction today vs. 15-20 years ago. This low volume level of 1-3 year old iron sold at auction lasted up through 2012, the last full year in the rear view mirror that had high commodity price levels. After 2012 the flow of 1-3 year old equipment items sold at auction jumped higher. Here are my key takeaways:
Yes - Way More Late Model Equipment Sold Now
Our data showed a whopping 236.4% increase in the No. of 1-3 year old equipment items sold at auction 2019 vs the year 2000. Also 181.2% more 1-3 year old stuff sold now (2019) vs 15 years ago (2004). So we weren't dreaming...there has been in fact a huge jump in the volume of very late model iron selling at auction.
The Change Started After 2012
Not a huge surprise here if we think about it. 2012 was the last year we saw sustained high commodity price levels before the drop came Spring of 2013.
2016 was the Peak
2015 saw a 76.6% jump in the No. of 1-3 year equipment items sold at auction vs 2014. That was followed by another leap higher in 2016 with a 56.3% increase in the No. of 1-3 year old items sold. Calendar year 2016 was the top of the mountain. Here again, this makes sense to me as we began to see the raw No. of machinery auctions jump higher around mid 2015, on the order of a 45-55% increase vs the period from 2007-2013. Two years into the ag economy slow down/recalibration saw more farmers deciding to retire as well as lot of farm equipment dealers needing to go the auction route to pare down excessive levels of very late model used inventory on their lots. Dealers hit the auction route hard 2014 through mid 2016 working down this excess level of late model used inventory.
Still Elevated Level of Late Model Equipment Selling at Auction - But Down from the Peak
2017 saw a decrease of 11.6% in No. of 1-3 year old equipment items sold at auction vs 2016. 2018 saw another 27.5% drop, and so far here in 2019 down another 7.3%.
Likely that we will continue to see this higher sustained level of 1-3 year old equipment items hitting the auction block as we march into the future. Why do I say that? Well, when you look at the AEM (Association of Equipment Mfg's) data reporting on levels of new Tractor (by HP range) and Combine sales we saw across the board increases through 2018 on into 2019 (through April). Yes, times are challenging in ag, but if you're going to keep farming what's become more and more an absolute TRUTH in the marketplace is that you NEED and have to have equipment that will not cause you down time. Can't have that with our ever shrinking time windows to get more and more done in both the fall and the spring.
Examples...#Harvest18 and #Plant19.
Uffda as we like to say up here in Minnesota.
So farmers wanting and needing to stay under warranty. Explains why since November of 2017 our auction sale price data has shown a HOT SPOT to be good condition under warranty 1-3 year old equipment. Solid buyer demand been there.
Of course another important element to this discussion is the change over the past 10 plus years regarding how much farm equipment, particularly tractors, are purchased for tax reasons...IRS Sec. 179 which allows ever greater immediate write off of new and used equipment purchases for your farm operation. This force has obviously been minimized the past few years as farm profits have been tough to come by, but back from 2007 - 2013 when $$ was flowing in ag, the level of new iron bought for tax purposes was....higher than anyone could ever quantify.
From a value perspective, I'll say again a theme I've touched on often over the years...the 4-7 year old equipment is where the buys are. As we've pointed out, folks compete heavily for the 1-3 year old iron in good condition and under warranty, and my never ending list of Machinery Pete examples of older 10-25 year old equipment items in very good condition selling super high at auction (cheaper than new, pre DEF, pre Tier IV) leaves open the door for good buys in that 4-7 year old range.
Should be interesting rest of 2019 into 2020...stay tuned.