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NEND | With all the distractions about land values falling off the cliff, I'm surprised there's very little discussion on equipment values.
Let's set this up first. All major manufacturers are within a few weeks or months of catching up on orders. "Multiple deals" to the big guys have been around now since our last major price correction in 2014-2016. I'm told these "multiple" deals are quite cost effective for those that get to run on that racetrack - $25,000-$40,000/yr for a power unit. What I'm not sure is if it is written as a lease or loan, and whether or not the farmer has any equity in the new paint that shows up every year. That machine gets one year of use and 400-600 hours, and then it gets "traded" in for the folks sitting in coach class to come buy them.
Unlike land, it seems that we are already at that cliff with an unknown bottom to it. Equipment lots are full around here. The '23 Quadtracks that were ordered showed up in January, and the '24 Quads are supposed to come in April. Well, there's a situation.
Sale on Auction Time just ended with a handful of Quads from Matejcek Implement. Not that I need one, but I could have purchased a '23 620 Quad with roughly 500 hours on it for $263,000. Yikes.
So, what happens to the "multiple deals"? Surely, the red or green dealers can't keep this up. If they end this selling strategy, then that operation that trades 2-4 tractors per year and 2-3 combines per year actually has to sign an equipment loan or lease? That sure changes a lot of balance sheets.
I'm on the sidelines here, as I do not have any equipment needs on my farm for the foreseeable future. But a deal can be a deal for the right price. | |
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Equipment Values
