Used ag equipment inventory wanes as values creep up

Agriculture equipment dealers put a dent in their used inventory last month as auction values ticked up, but there’s still a long journey on the road to recovery. 

After repeatedly taking losses on used equipment last year amid high inventory and OEM production returning to full swing, more dealers are holding firm with pricing, bringing some stability to a volatile market, Sandhills Global Equipment Lease and Finance Manager Jim Ryan told Equipment Finance News. 

“[Dealers] felt, at the end of the year, that they had already lost enough money for the year,” he said. “So, we have seen some of the retail numbers get better.” 

Meanwhile, many dealers are not accepting trade-ins because values of used agriculture equipment have depreciated significantly in recent years, leaving more farmers to sell their own used gear, Ryan said.  

This trend could cause inventory to “continuously flow into the market to where it’s not coming from a dealer; it’s actually coming from a farmer or corporate farm or whatever the case may be,” he said. 

While used equipment values were down year over year in January, month-over-month values increased across the board, according to Sandhills Global’s Feb. 7 report on used-equipment trends. 

Used tractors, 100 horsepower or more 

• Inventory rose 10.8% YoY, but fell 2% MoM; 
• Asking values fell 5.3% YoY, but rose 0.2% MoM; 
• Auction values declined 8.5% YoY, but increased 0.8% MoM; and 
• The Equipment Value Index spread, the percentage difference between asking and auction values, stood at 38%, down from 40% in December.  

Used planters 

• Inventory decreased 5.6% YoY and 5% MoM in January; 
• Asking values dropped 5% YoY, but jumped 4.5% MoM; and 
• Auction values fell 3.2% YoY, but rose 7% MoM. 

Used combines  

• Inventory levels were down 5.5% YoY, but up 1.1% MoM; 
• Asking values fell 0.3% YoY, but rose 1.3% MoM; and 
• Auction values declined 1.7% YoY, but increased 1.5% MoM. 

Used compact and utility tractors 

• Inventory decreased 22.9% YoY and 3.9% MoM; 
• Asking values fell 3.6% YoY, but rose 1.2% MoM; and 
• Auction values dropped 4.4% YoY, but jumped 1.3% MoM. 

Finding ‘hot spots’ for certain equipment 

While used values are still relatively low, dealers can increase their bottom line by auctioning or wholesaling equipment in geographical “hot spots” for certain equipment, Chase Phelps, owner of Shawnee, Okla.-based Phelps Equipment Group, told EFN. Open communication helps dealers find these hot spots, he said. 

“If we hear about equipment that’s not moving somewhere, and we are moving it, that seems to help each other out,” he said. “But I do think that the equipment marketplace is still very strong. I just think we’re starting to see values kind of level out.” 

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