Consider Becoming A More Aggressive Buyer This Year

August 06, 2024 It’s funny how quickly trends can do a 180.

Remember the worldwide supply chain mess coming out of the pandemic? In our ag sector, it was difficult to get that new tractor, combine, planter, sprayer or baler you wanted. Manufacturers weren’t able to make enough to meet demand. Dealers had very limited allotments. You felt lucky or blessed to get your name on the list.

Then you crossed your fingers and said your prayers for your new combine or planter to show up in time for harvest or planting.

Of course, things are radically different just over two years down the road. The shocking reality from the equipment auction front for the first half of 2024 is a great example: There was a whopping 74.2% increase in the number of 1-to-2-year-old equipment items sold at auction versus last year.

If you compare those numbers to 2021, it’s even more eye opening. A 351.7% increase in 1-to-2-year-old equipment items were sold at auction in the first six months of 2024 versus 2021. There were hardly any available then, but there’s an ocean’s worth out there now.

Not surprisingly, auction price levels have softened as a result of this.

If you look at the last big downturn in used farm equipment values, in 2014 to 2015 after commodity price levels dropped, we saw the steepest drop in large, late-model farm equipment values in my 35 years of tracking this market daily. There were year-over-year average auction price drops in the 20% to 25% range for both 2014 and 2015.

But I saw only 312 1-to-2-year-old equipment items sold at auction in the first half of 2014, and that only bumped up a smidge in 2015 to 456 sold. Compare that to 757 in the first half of 2023 and 1,319 in 2024.

What’s The Difference?
To understand this gaping difference, we need to pull back and recount the difference with dealer networks now versus 10 years ago. There are far fewer dealer owner groups now. And as they do today, dealers back then had excess large, late-model used equipment on their lots.

This was problematic for dealerships with two to four locations to aggressively push out their used inventory. Today, the mega size dealer groups have been much more proactive at working to pare down their excess large, late-model used inventory and get ahead of the issue. This movement started July into August of 2023 mainly with late-model combines and saw another huge bump with year-end auctions in November through December. The losses per machine have been painful for dealers. We’re likely to see lots of 1-to-2-year-old equipment items offered at auction during the rest of 2024.

The Machinery Pete Takeaway
In terms of looking ahead to upgrade your farm’s equipment fleet through used purchases, I think it could be dangerous to rely on past patterns from decades ago. The excess is turning much faster this time. This signals that you might want to consider being a more aggressive buyer earlier than you thought you’d have to be. Back to All