In times of tight margins, every purchase must have a purpose with ROI top of mind. As you optimize your equipment, crop inputs, farmland and business intellect for the year ahead, take the time to plan your work, and then you work your plan.
The four-to-seven-year-old range is the sweet spot for used tractors, combines, sprayers and trucks in terms of maximum depreciation. I’ve written about the magic 10-year mark and farmer demand for tractors in good shape with lower hours.
That’s why the four-to-seven-year-old range is ideal. You run it for a few years and then voila — you have the low-hour, 10-year-old unit everyone wants.
John Deere 9620RX tractors are a perfect example. John Deere made this model from 2016 to 2021, so they’re three-to-eight years old now. The average auction price on 9620RXs in August 2024 stood at $325,988. That’s down 23.5% versus last year’s average auction price of $426,325. It’s a pretty steep drop but right in my sweet spot for depreciation. The current average dealer advertised price on John Deere 9620RXs is at $476,037. That figure is down from the average dealer advertised price just 90 days ago of $485,960.
That’s also an example of how the hard cash auction market leads the way. Used equipment values can go up or down quite quickly and significantly. They went up from fall 2020 into 2023 by a lot. It was a historic rise, but now they’re down here in 2024 — the most pronounced of the drop being in my sweet spot range.
Buying Opportunities Ahead
Accentuating the drop in value on four-to-seven-year-old used units is the large uptick in volume hitting the auction block. Through August 2024, I’ve already seen a 150% increase in the number of 9620RXs sold at auction versus all of 2023 combined.
Watch for November and December 2024 to be exceptionally busy on the auction front as dealers continue to aggressively pare down their late-model used inventory levels. This is when farmers become active buyers looking for IRS Section 179 tax write-offs on equipment purchases.
Yet to be determined is if 2024’s lower profitability environment will weaken the annual year-end run-up in equipment purchasing.
I find individual auction price examples to be the most telling. We filmed an auction in Paris, Mo., at the end of July for our “Machinery Pete” TV show. It had the largest number of large late-model equipment I’ve ever seen at a sale. A 2018 John Deere 9620RX with 1,933 hours and an extended powertrain warranty (good until December 2025 or 2,865 hours) sold for $244,000. Less than two years earlier, a December 2022 farm auction in Spring Valley, Minn., had a 2018 model 9620RX with 1,566 hours sell for $410,000.
There are going to be some great buying opportunities the rest of 2024 and into 2025 on four-to-seven-year-old units in nice condition. Just remember Machinery Pete’s simple math advice: In just a few years, they’ll be the 10-year-old units everyone always wants.
Your Next Read: 10 Smart Ways to Start Cutting Your Fertilizer Bill
