Interesting Phenomenon at Auction
Jun 16, 2018
This is really interesting.
Since December 2016 I've been noticing something at auction. Despite a significant jump in the No. of farm machinery auctions taking place (40% increase starting back in July of 2015) and despite a very challenging ag economy, I've been seeing increased buyer demand in very good condition 1-3 year old pieces of equipment when they come up for sale at auction.
Case in point, yesterday (June 15, 2018) on farm auction in northeast Kansas by our friends at Sullivan Auctioneers (http://www.sullivanauctioneers.com), a 2015 John Deere 6155R tractor with only 206 hours, IVT trans., Power Guard warranty through June 2021, sold for $114,000. No loader. Here's a picture of the tractor:
$114,000 is the highest auction sale price I've seen on a John Deere 6155R sold with no loader.
And of course the past week hasn't been kind with drops in commodity prices. Yet this very nice, like new condition 2015 model 6155R sold for $114,000. Why? Well, this gets to our interesting trend. At the root of the trend is the truth that farmers are working hard to cut corners, save dollars any way possible. In tough ag times like these more focus shifts to the used equipment market. Less $$'s to lay out vs buying new. But buyers want and need warranty coverage as down time and big $$ repair bills are the enemy.
But why the hotly focused buyer/bidding interest?
Let's step back for a moment here...2-3 years ago in 2015 - 2016 how much new equipment was sold? Not near the level of new equipment sold from 2008 - 2013. Also now not the huge glut of 1-3 year old machines we saw stuck on dealer lots back in late 2013 into mid 2016. Dealers collectively bit the bullet for the most part and painfully worked down that huge glut of 2011 - 2014 model year combines and tractors off their lot, at significant $$ losses.
Farmers looking to buy nicest 2-3 year old tractor, combine, sprayer available that is low hour and under warranty...not as many 2-3 year used machines on dealer lots vs few years ago...so now here along comes a super nice 2-3 year old tractor/combine/sprayer for sale on an auction...and...
$114,000 for that John Deere 6155R yesterday on the Kansas auction. Current Avg. Dealer Advertised Price on 2015 John Deere 6155R tractors = $105,807.
Another prominent example of this came back on November 21, 2017 on a farm auction in east-central Illinois where the 2016 Case IH 8230 combine pictured below, with 362 engine hours sold for $322,000 (no heads), record high auction price.
2 weeks later, on a December 7, 2017 farm auction in northeast Missouri, a 2015 model Case IH 8240 combine with 613 engine hours sold for $311,000 (no heads). Sullivan Auctioneers was the auction firm on both those 8240's.
One more example from last year for you...on a February 24, 2017 huge farm auction in north-central Ohio, the 2016 model John Deere R4045 sprayer pictured below, with 216 hours, sold for $317,500.
I look this trend to continue, think farmers needing to upgrade equipment will look at super nice condition 1-3 year old, low hour, under warranty tractors/combines/sprayers as a desirable option. Thing is, when these items show up for sale at auction....they will be bidding against quite a few other folks...making it likely we'll continue to see these very strong hard cash auction prices.
Here's a link to (146) John Deere 6155R Tractors for sale today all over the country, click to view: https://www.machinerypete.com/tractors/100-174-hp/john-deere/6155r