Machinery Pete: Prices On Fire For Used Tractors

My Spanish is rusty, but the market for used tractors in good condition late in 2020 is definitely en fuego (on fire).

Used tractor values were already strong, but they rose through the third quarter of 2020 and just kept rising into mid-November. Rising commodity prices surely helped, as did tightening of used inventory levels on dealer lots.

Of course, the ever-rising price of new equipment is a factor. Plus, the IRS Section 179 year-end iron buying for tax minimization purposes has awakened and is now further fueled by President Donald Trump’s tax law changes enacted Dec. 22, 2017, which beefed up Section 179 incentives.

The result of this mix was a torrent of super strong auction prices on used tractors in good condition late in 2020.

Buyer demand for nice used tractors are simply ratcheting higher. Another way to vividly see this increasing buyer demand lies in the shrinking spread between the average auction price and average dealer advertised price.

Take John Deere 8360Rs as an example. They were made from 2011 to 2014. Look at the current prices:

• Average auction price is $152,211.
• Average dealer advertised price is $152,849.

Also, look at the Case IH Magnum 235s:

• Average auction price is $95,563.
• Average dealer advertised price is $98,535.

Wholesale values nearly equal retail values. That’s a hot market, folks.