Machinery Pete: How Equipment Values Change Over Time

October 26, 2016 02:38 AM
 
tractors_farm

I know it can seem as though I only talk about crazy-high sale prices. But for 27 years now, I’ve been just as determined when it comes to compiling prices on average- to poor-condition used farm and construction equipment of all types sold throughout North America. It makes no difference to me if it’s shiny or ready for the junk pile. I just want to know what the equipment sold for, when it sold and where the auction occurred.

Sometimes, though, it can be easy to latch onto those shiny new record-high sale prices. 

Take the 1983 John Deere 4250 2WD tractor, amazingly with only 947 actual hours, that sold Sept. 24 for $50,000 at a farm estate auction that took place in central Michigan. Yes indeed, that’s a new record-high auction sale price for any John Deere 4250, whether a 2WD or a mechanical front-wheel drive machine. 

Obviously, a 33-year-old tractor with under 1,000 hours selling on a local farm estate auction is one very rare bird. Does that make your John Deere 4250 with 7,500 hours worth more money? Nope, it sure doesn’t. Any John Deere 4250 with 7,500 hours is worth as much as similar machines sold recently. 

Condition Trumps All. This example brings up an interesting trend I’ve noticed throughout 2016. Although gently aged, nice-condition used equipment continues to produce a premium sale price at auctions, gently aged equipment in average or just so-so condition has experienced a fairly sharp fall in values.

John Deere 4430 tractors are one example. Made by Deere from 1973 to 1977, the classic 140-hp model has dropped a whopping 10.2% in value this year. That’s according to average auction price data, which show an average annual sale price of $11,026 compared to last year’s average auction price of $12,274. 

This decline is even more significant when viewed through a slightly longer lens over the past five years, as the table below shows.

Why Perspective Matters. Sure, I could grab your attention with news of the quad-range John Deere 4430 with 6,100 hours that sold Sept. 23 for $20,000 at a farm auction in southeast North Dakota. Again, though, keep in mind value declines for the model.

Similarly, I could tell you about the 1990 model Case IH 7120 Magnum tractor with only 1,570 hours that sold Sept. 11, 2015, for a record-high $69,000 at a farm auction in central Michigan. Yet the data show the average auction sale price for 7120s is down 23.3% so far this year. Values fell from $34,799 this past year to $26,667 in 2016, driven by softer sale prices on run-of-the-mill Case IH 7120s.    

Here’s my point: As auction sale prices have shown consistently for nearly three decades, it pays (big time) to take great care of your equipment. 

John Deere 4430 Tractor Values
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Year-over-year auction sale prices have fallen by double-digit percentages for used 4430 tractors, a sharp contrast from the previous four years of steady values.  


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