Agriculture equipment dealers continued to chip away at used inventory last month, but challenges tied to price sensitivity and late-model machines persist.
Used inventory dropped in every major category for the second straight month in June, with the compact and utility tractor markets seeing the largest year-over-year decline, according to Sandhills Global’s July 7 report.
Aggressive OEM incentives for new equipment have helped dealers right-size their fleets and offload used gear priced at around $100,000 or less, Sandhills Global Equipment Lease and Finance Manager Jim Ryan told Equipment Finance News.
At the same time, dealers are struggling to sell higher-priced, late-model inventory, prompting some to send those items to auction despite the potential for taking a loss, Ryan said.
“Now you’re dealing with the repercussions of [incentives] with late-model dealer inventory,” he said. “And I think dealers are realizing that we’re in a bad spot right now, we have stuff to move. … We’re starting to see a lot of that dealer inventory hit the auction market now … which is seasonably earlier than normal.”
Dealers are especially taking losses on high-end combines and tractors, including some late-model units costing roughly $450,000, Ryan said.
Used tractors, 100 horsepower or more
- Inventory fell 1% year over year and 1.6% month over month in June;
- Asking values dropped 5.4% YoY, but rose 0.5% MoM; and
- Auction values dipped 2.9% YoY and 0.1% MoM.
Used combines
- Inventory declined 6.5% YoY and 2.7% MoM;
- Asking values ticked up 0.04% YoY, but fell 1.1% MoM; and
- Auction values decreased 6.8% YoY and 2.7% MoM.
Used sprayers
- Inventory dropped 6.1% YoY and 2.8% MoM;
- Asking values fell 5.7% YoY, but rose 0.5% MoM; and
- Auction values fell 2.9% YoY, but rose 0.9% MoM.
Used planters
- Inventory declined 14.8% YoY and 1.3% MoM;
- Asking values dipped 2.9% YoY and 1.9% MoM; and
- Auction values jumped 7.4% YoY, but fell 0.2% MoM.
Used compact and utility tractors
- Inventory decreased 22.5% YoY and 0.9% MoM;
- Asking values were down 0.3% YoY and 0.03% MoM; and
- Auction values rose 0.7% YoY, but fell 0.2% MoM.
Pricing tops dealer strategy
EVI spread, the percentage difference between asking and auction values, landed at near-record highs of 39% and 43% for used high-horsepower tractors and sprayers, respectively, according to the Sandhills report.
As sensitive pricing dynamics continue to influence the used market, dealers should constantly re-evaluate their retail prices to stay competitive, Benet Snyder, used equipment manager at Perry, Iowa-based dealership Van Wall Equipment, said during a June 24 Tractor Zoom webinar.
“That’s the only thing that’s going to get you phone calls right now is having a competitive price in the used market,” he said. “And the only way to do that is using the tools that are out there to analyze those price changes and stay in the groove. If you’re not doing it every day, you’re probably not knowing what’s going on.”
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