OK, so you are a young farmer thinking of expanding your equipment fleet. Before I chime in with a few helpful tips, let me first say your timing is excellent.
Farm equipment dealers and machinery auction companies continue to smash away on high used- inventory levels. The number of farm machinery auctions began to rise to the tune of 30% to 48% year over year starting in mid-2015, and I expect lots of sales throughout 2016.
Under Pressure. Real opportunities to upgrade your fleet in the used market lie in equipment categories that have been under pressure the past couple of years. I’m talking about larger-size, late-model used equipment such as 24-row planters, self-propelled sprayers and 200-plus-horsepower tractors.
Let’s zero in and say you’re thinking of buying a 200-plus-horsepower used tractor. Check out my Used Values Index report in this category for the fourth quarter of 2015. See how used values have fallen from a 9.5 rating in the first quarter of 2013 down to a 6.3 rating now?
As you think about buying this year, here’s my advice.
Tip No. 1: Think three to seven years old. This is the sweet spot for getting max value. The high and rising cost of large-scale new farm equipment lends itself to aggressive depreciation in those first years after being sold.
Also consider how used buyers tend to think. For a high percentage of used buyers, the final price tag is a high-ranking priority—as it should be, of course. Obviously, the lower the price, the more receptive buyers tend to be. I’ve noticed buyers tend to put increased weight on acquiring really good-condition, 10-plus-year-old models because, quite simply, the price tag is lower.
Tip No. 2: Timing is huge. Note how used values of 200-plus-horsepower tractors have fallen during both the second and third quarters of the past four years, in the chart above. Wow. Be aggressive in the market this spring through summer.
Tip No. 3: Look north. Our strong U.S. dollar has pushed the Canadian dollar toward its weakest point in history. Current exchange rates hover in the 67¢ range. There are buys to be had for U.S. buyers, particularly on equipment items valued at more than $100,000. Check first with your local dealer, as many have existing relationships with Canadian dealers and can help you navigate any red tape to help you find and bring home machinery at a great value.
2016 Represents A Great Time To Buy
Machinery Pete's Used Values Index recaps machinery value trends. Today, smart shoppers can find great value buying good-condition used equipment three to seven years old.
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