Used machinery market continues to show strength

(Kara Oosterhuis/RealAgriculture)

While year-to-date numbers from the Association of Equipment Manufacturers have been weak in terms of new equipment sales numbers, especially for 4-wheel drive tractors and combines, the used equipment market has been strong.

As the cost of new equipment has soared, used machinery — even something as old as 15 plus years — has become more attractive in some cases.

Buying a solid piece of machinery that somebody else has already owned, and has taken the depreciation on can offer value to farmers. “If the piece of used equipment is in good condition, almost across the board, depending on what it is, it’s been holding its value really well,” says Greg “Machinery Pete” Peterson.

Machinery Pete joined RealAgriculture’s Shaun Haney in a discussion on used equipment sales.(Story continues below video)

Of course reliability is critical in a tight season. As Peterson explains, when dollars are tight, and the same acres are getting farmed, you need something reliable to get you across the field.

The number of auctions has trended higher in recent years — a lot of the equipment seen in auctions now is from retirement sales, he notes. These pieces of equipment were often bought at the tail-end of the good times, have low hours, and are the types of equipment that everybody wants.

Since the spring of 2013 and a decline in commodity prices, Peterson says that his “limbo bar,” or his threshold at which a used piece of equipment is a good deal or not, fell from $100,000 to $60,000 – $70,000.

In terms of innovation, farmers certainly appreciate new technology, but due to tight budgets, pieces of equipment that can be retro-fitted as opposed to new equipment, are in high demand to accommodate these new technologies.

Since the start of COVID-19, and the inability to have in-person auctions, online auctions have ramped up, and have been wildly successful. As Peterson explains, “The auction industry leaned into it, and fortunately, we’re 15-plus years into the online bidding platform, so the customer base was ready for it.”

As for new sales, dealerships still seem to be healthy according to Peterson, and even though new equipment sales may be shrinking, consolidation of dealerships and streamlining of inventory systems results in well-capitalized dealerships taking better advantage of their inventories.

Related: Canadian farm equipment sales continue to slide through the end of April

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