Used compact, utility tractor inventory drops 24%

Agriculture dealers are putting a dent in used inventory as they lower retail prices, and they may be forced to take bigger losses in coming months to make way for new models. 

Used agriculture equipment inventory fell year over year in every major category last month as dealers purged older machines, according to Sandhills Global’s Sept. 5 report on used-equipment trends.  

Used equipment priced below $100,000 has attracted buyers in recent months, but dealers’ unwillingness to accept trade-ins could cause a glut of inventory to hit the market in the fourth quarter, Sandhills Global Equipment Lease and Finance Manager Jim Ryan told Equipment Finance News.  

“We’re hearing from a lot of auctioneers that a lot of these farmers are all of a sudden reaching out needing to sell, needing some cash flow just to make their operating loans,” he said. “There’s going to be a lot of just farmer-owned inventory that’s out there.” 

High input costs are the most common reason for farmers taking out larger operating loans this year, a troubling sign for the farm equipment market, Michael Langemeier, associate director at the Center for Commercial Agriculture at Purdue University, told EFN.  

“If we see some increase in input prices, that’s just going to create even more stress,” he said. “I go back to the break even for corn. …  We were at $4 before COVID. Now we’re at $5, a 25% increase. Well, if we increase from $5, up another 10% or something, obviously your margins are even worse. So, it would make it even more likely that they’re not going to buy machinery.” 

Meanwhile, the used compact and utility tractor market saw the largest inventory declines in August, according to Sandhills. 

Used tractors, 100 horsepower or more 

• Inventory dropped 7.5% year over year and 1.9% month over month; 
• Asking values fell 6.2% YoY and 0.1% MoM;  
• Auction values declined 3% YoY and 0.5% MoM; and 
• EVI spread, which measures the difference between asking and auction values, held firm at 39%. 

Used combines  

• Inventory fell 11.9% YoY and 6.6% MoM; 
• Asking values decreased 2.8% YoY and 5.8% MoM;  
• Auction values rose 6.2% YoY, but dropped 5% MoM; and 
• EVI spread was unchanged at 43%. 

Used sprayers 

• Inventory fell 10.1% YoY, but rose 1.2% MoM; 
• Asking values declined 3.8% YoY and 0.2% MoM;  
• Auction values jumped 4.4% YoY and 1.3% MoM; and 
• EVI spread dipped 2 percentage points to 41%. 

Used compact and utility tractors 

• Inventory decreased 24.3% YoY and 2.8% MoM;  
• Asking values rose 1% YoY and 0.7% MoM; and 
• Auction values were up 2.1% YoY and 0.4% MoM. 

Balancing retail, auction 

Aggressive OEM incentives and production cuts have provided some relief to the beleaguered farm equipment market this year, as they’ve allowed dealers to focus more on offloading stale inventory.  

But with new-model machines on the way, dealers will be forced to make tough choices between liquidating via auction and aggressive retail pricing, Ryan said. 

“At some point, you would love to see more of a balance and not a ton flood the market on auction,” he said. “But I think we’re to a point with a lot of these dealers that they’re going to have no choice. They can’t floor plan that for another year. … Moving a lot of late-model higher classes over to next year just isn’t feasible.” 

Check out our exclusive industry data here.