Machinery Pete: The Perks of Pre-Tier IV

August 21, 2018 02:59 PM
 
2010 John Deere 8320R

When the gavel fell at $172,500 it was the highest sale price for a John Deere 8530 in more than three and a half years. The 2007 model with 2,823 hours sold at a July 17, 2018, farm auction in northwest Iowa. I had to go back to a Dec. 2, 2014, consignment auction in northeast Missouri to find a John Deere 8530 that sold higher, and it was a 2009 model with only 1,075 hours. The final sale price was $193,000.

I wrote a blog post about the particular 2007 John Deere 8530 and received an interesting response from an employee of a major engine manufacturer: “Couple years prior to Tier IV emissions. They are demanding a premium for good reason.”

Bingo. Tier IV engines were mandated and introduced to the tractor market in stages, first in 2011 and then Tier IV Final standards in
2014. The trend of increasing buyer demand for good condition, low hour used tractors with pre-Tier IV engines has been picking up speed, in part because of continued profit pressure and low commodity prices. How’s that you ask? Simple:

  • For the past five years, a lot of farmers have delayed their equipment purchase/trade cycle and sat tight with closed checkbooks. That’s understandable. But now it’s time to update the fleet; even if they don’t want to, they have to. No farmer can afford down time.
  • Farmers are opting to go the used route to save a few dollars.
  • One truth I know from tracking auction price data for nearly 29 years is that collectively it has always been the buyer’s tendency to want nice condition, low hour tractors that are more than 10 years old. Combine the ever-rising price of new machinery and farmer’s familiarity with slightly older models and a lower price tag and you get increasing buyer demand for good condition models in the 10-year-old range.
  • For farmers, pre-Tier IV tractors can be easier to work on. Plus, they have a history with them.

Armed with hard data proof of strong/rising buyer demand for good condition, low hour pre-Tier IV used tractors, one thing jumps to mind. If you have one for sale, give it a shout out in your listing, “Pre-Tier IV tractor.” Don’t be shy. I have started to notice smart auction firms doing this on their sale bills as well as dealers in their online listings at www.Machinery Pete.com.

If you’re going to go fishing, it’s a good idea to bait the hook.

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