Year-end buyers of four-wheel drive tractors didn’t sit on their hands
After a five-plus year extended run of exceedingly strong used values, auction prices began to fall in late spring, specifically on one- to four-year-old used four-wheel drive tractors.
These falling prices held through the summer and into mid-fall, as my "Used Value Index" report for the third quarter 2013 shows. The year began with a record level of 9.3 on my 1-10 rating scale for used values. The graph nose dives down to a rating of 7.7 through the second and third quarters. It’s still historically strong, but it’s quite a bit lower than the recent and long-lasting highs.
So why were late-model used four-wheel drive tractors slipping? More units were piling up on dealer lots around the U.S. as they struggled to find that second buyer. Subsequently, dealers needed to push excess inventory off their lots. So they went to the auction block and sold for less.
One example is the 2012 Case IH Steiger with 15 hours that sold at an Aug. 14, 2013, auction in east-central Illinois for $182,000. This was almost new, yet it sold for up to $60,000 less than the on-the-lot asking price.
Given the price slide, I was anxious to see what would happen in November and December, which historically see a price uptick because of year-end buyers who want to take advantage of Sec. 179 tax write-off. With the reality of $4 corn and increased pressure on profitability moving into 2014, would the annual price uptick occur?
The answer: yes. A Dec. 11, 2013, farm retirement auction in northeast Iowa featured three very nice condition four-wheel drive tractors, all Case IH. Each one sold a bit higher than I thought, despite –20°F wind chill temperatures that day.
Near-Record Prices. The 2006 STX480 with 1,440 hours sold for $172,000—that’s the second highest auction price I’ve seen on an STX480 and the highest price in four years. Additionally, a 1997 Case IH 9330 Row Crop Special with 4,368 hours sold for $74,000, and a 1997 Case IH 9350 with 4,670 hours sold for $84,000. This tied an all-time high auction sale price.
The important thing to remember is their age. The "newest" one, the STX480, was a 2006 model, which is nearly eight years old. It sold for a very strong sale price, but at eight years, we’re getting away from the "soft spot" of one- to four-year-old used four-wheel drive tractor values. Get further away, say out to 16 years old on the pair of 1997 model Case IH four-wheel drives, and you’ll see even stronger sale prices for ones in excellent condition, as they were.
Since 1989, Greg Peterson has compiled more than 500,000 auction prices, which he updates at www.machinerypete.com. Read his blog and watch auction videos at www.agweb.com/machinerypete. E-mail him at email@example.com.