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The dearth of New Orders.
Without a doubt, 2024 was an incredible year. Both equipment dealers and producers were unable to see through the difficulties of Everything that was in place. People were weighing their options when it came to making decisions due to Low commodity prices, high interest rates, expensive machinery costs, and a contentious presidential race. The sale of Used equipment at auctions was a continuous and steady process, with the usual players taking the lead. By the end of 2024, the market for used equipment appeared to be at a low point, and the number of used tractor lots had increased dramatically.
Inventory Rising.
The quantity of used tractors in dealer inventory began to rise in late 2023 and has never been lower than in Q3 of 2024 when There was a temporary suspension from increasing inventory. During Q3, there was a surge in the delivery of new machines, which led to an increase in stock.
In January of 2024, the quantity of used tractor stocks was 11,607, but it increased To 14,150 by the end of Q1 of the same year. The beginning of Q2 saw an increase from 14,150 to 14,276. The supply of used tractor parts increased by 40% in the first quarter of the year, with a total of 14,276 units arriving at 16,244 And the inventory remaining the same as it did in 2020.
Unlike the other large ag segments, only used tractors have experienced an increase in inventory since Q3-Q4 of that year and beyond. Quarterly inventory of mixers, sprayers, and planters has been decreasing with a quarter-over-quarter drop.
The dearth of New Orders.
The lack of new orders for 2025 delivery is The only positive development for large ag equipment. The absence of “fresh trades” in dealer lots will affect The current inventory and result in dealers removing late-model low-hour equipment and increasing The supply of older equipment with a lower price point. This could lead to more bargain-hunting by buyers, but it also means that the high-value, low-hour tractors used by dealers to balance their inventories will become less common.
There was no break in the delivery of New tractors, and they were not subject to a preseason order writing period. Dealers will place orders for new tractors and order equipment. Dealers will take risks by betting on Tractors for years before other machines can achieve the same level of market share. Auction sale bills in the year 2025 do not include used tractors, as I can’t see them ever being sold.
Ripple Effects.
However, it’s not a linear process. Dealers who specialize in servicing large ag equipment, particularly tractors, will experience the pressure. A larger quantity of previously owned tractors could result in service and parts departments being more inclined to carry out maintenance on their older machines. The service business volumes will be boosted by an increase in repairs and breakdowns.
Also, the connection between outdated agricultural equipment and technological advancements is worth considering. As the market for older tractors expands, farmers may consider retrofitting their equipment With newer technology like GPS and automated maintenance. While this may require some time to transition to new systems, it offers a way to maintain the performance and reliability of older machines While maintaining competitive pricing.
The same principles apply to tractors as they do to other items: The quantity of previously used vehicles must be in line with The number of second-hand buyers. If this fails to happen, then liquidation of equipment is required. Dealers will have to make adjustments by maintaining stock, decreasing prices, or selling equipment at auction in large quantities to reduce inventory. The balance is always in flux and will change as the year goes on.
With its own challenges and opportunities ahead in 2025, it will be an unique opportunity. A rise in second-hand equipment sales is likely, but it depends on a complex combination of economic conditions, technological innovations, and changing market trends. The most successful Dealers are those who remain agile and receptive to these modifications. It will be a year of observation and recalibration for the rest of the industry. However, one thing is certain: The future of ag equipment industry will be determined by the use of Used tractors.
To learn more about the economic drivers of farm equipment, listen to the “Moving Iron” podcast. Movingironllc. Com. “Moving in a non-ironic manner” is the focus of discussion.