In a recent Q3 equipment market webinar, we covered the changing supply, demand, and values of used equipment that dealerships should take into consideration for business and pricing strategies as we head into 2024.

Andy Campbell, Director of Insights at Tractor Zoom, notes the market is shifting away from historic highs of 2022 as the industry’s supply chain has mostly returned to normal. Analyzing the data available today helps us understand the trends in the major equipment categories and leads to more informed business decisions.

Below are five takeaways from the market update webinar.

While farm equipment supply is growing and able to fulfill the pent-up demand from the pandemic, it’s currently outpacing the market’s needs, which can tighten margins for dealerships. When supply surpasses demand, turns slow and result in higher carrying costs, which is exacerbated by today's higher interest rate. Of consideration for dealerships is how to temper being reactive and prevent a devalued market.

Another factor to consider is farmers’ reduced buying power. We continue to track the projected reduced net farm income, increasing inflation, higher interest rates and input costs, and lending constraints across the industry.

Between November 2022 through mid-summer 2023, we saw a 70% jump in Class 8 combine supply, which prompted dealers to take action. According to Tractor Zoom Pro data, in August 2023, there were 4X as many combines with less than 1,000 separator hours sold over the same period in 2022. This may have implications on end-of-year values as the market is becoming saturated.

Overall, large combine auction values are down about 5-10% year over year, but Class 5 and 6 combines have experienced steady values as the supply has not increased as dramatically.

Supply for larger row crop tractors started to surpass demand in early 2023 yet this fall, the demand resiliently was catching up. Values for 300-425 HP tractors have remained strong and even increased at dealerships and auction lots. This is a category that we continue to monitor closely as there are a large number of row crop tractors slated for auction before the end of the year. If you are interested in receiving updates on our auction-by-auction analysis, email Andy and let him know to include you on the correspondence. 

Utility tractors, which are more hardy against the effects of factors like the corn and soybean markets, have increased in supply by 23%. Turns appear to have slowed by about 20% in 2023 compared to 2022, which is reflected in the growing supply. Auction values for all utility tractors has dropped 12%, largely due to older models. For utility tractors with between 500-1,000 hours, the value at dealerships has increased about 4% year over year and auction values have increased 5% year over year.

Over the course of the pandemic, the supply of compact tractors increased significantly and because that market has been fully saturated for well over two years, the values at auction have dropped in the 10-15% range.

Self-propelled sprayers have had a recent resurgence in supply at about 44% year over year. According to Tractor Zoom Pro Market Trends data, we see a 12% increase on dealer listing prices and 20% increase in values at auction on machines with between 1,000-2,000 hours. This is also a category we are following closely as there are dozens of high-quality sprayers on the auction block in the coming weeks.

Read more about this supply increase and its effect on pricing in our fall self-propelled sprayer analysis here.

At the end of the year, it’s crucial to take into account all of the market trends and factors above. Even if it’s projected to be a better-than-expected end to 2023 (although still softer than the highs we’ve seen), make sure to carefully consider your holding costs and monitor your inventory so you’re prepared to mitigate any risks in 2024.

In addition to our deep dive into demand and auction values for row crop tractors with between 1,500-3,500 hours, reach out to Andy at acampbell@tractorzoom.com with any further questions about the market trends and how to leverage Tractor Zoom Pro data and insights at your dealership.