Reference Points

Earlier this year I wrote an article titled “There’s No Easy Buttonfor Used Equipment Valuations.” The column outlined how paying attention to the markets and understanding history is a more foolproof method of evaluation equipment. In this article, I want to explain some of the reference points I use to see the health of the overall market as well as my current used inventory.

What is on the internet? TractorHouse.com and MachineryPete.com lists the numbers of machines in each category and by the manufacturer. I have this data back to August 2014. The categories included are combines, combine platform heads, combine row-crop heads, 175+ horsepower tractors, 100 – 174 horsepower tractors, sprayers, self-propelled forage harvesters and planters. These are the number of machines listed on various internet listing sites, respectively. I uses MachineryPete.com and TractorHouse.com because they have the largest number of machines. Mind you, there is much overlap between the sites and allows for a better market feel.

So for example, In April 2019 the used combine market was comprised of the 12,485 used combines. Of the manufactures I track, this is the breakout. John Deere 6931,  Case IH 3053, Massey Ferguson 266, Gleaner 533 and Challenger 29. I have recently added Lexion/Claas to the mix. I also track specific models for each category. Since I work for a John Deere dealer and the overwhelming amount of used equipment traded is John Deere, the particular models I track are all John Deere models. Continuing with the combine, these were the numbers for April 2019: S660-454, S670-1201, S680-1343, and S690-398. I have recently added S700 Series combines to this list.

So now I have all this data, what do I do with it? Like anything, the data gathered is only good if used. I use this bulk data to see what inventories are doing month-over-month and year-over-year. These data points help paint a picture of what the market is going to do. I look back at the same month a year ago and see if inventories were higher or lower than the current month. I do the same for the three months leading up to the current month to see if any trends are developing and compare back to a year ago.

To me, the past year is the most important, but going 3 and 4 years back is a great trend indicator. I take the data and make a graph for each month — not only of bulk data but also the hour breakouts for each manufacturer.

Data points me in the right direction. It doesn’t give me trade values or what a machine is worth in the future. It merely gives me a reference point in time and market supply. I still have to determine market demand of not only my local market but, the market as a whole. The internet has made the world a tiny place and transportation cost, as a percent of the sale price, has made buying equipment even more of a commodity. It is paramount that used equipment managers understand what is on the internet —  not just value, but supply. The better-understood market influencers are the more profitable used equipment becomes. Those who do not know their history are doomed to repeat it.

For more topics like this, listen to Moving Iron Podcast on iTunes, Google Play, Stitcher Radio, TuneIn Radio, Spotify, and SoundCloud.  To continue this conversation, go to  Facebook, Twitter, and Instagram @MovingIronLLC or send an email at MovingIronPodcast@MovingIronPodcast.com. So until next time, thank you for reading and let’s go move some iron!

 

References: TractorHouse.com and MachineryPete.com

Casey Seymour