Price trending reveals that the gap between resale and auction prices varied significantly from month to month. Shortly after reaching a high of $65,690, January auction prices fell to their lowest level in 15 months.
Key Takeaways for Decision Makers
BUYER/SELLER: Average resale and auction prices for tractors with 125 to 224 PTO hp are not following the same patterns from month to month. Auction prices are particularly variable, representing anywhere from 30.5% to 64.7% of resale prices.
It’s no secret that equipment dealers are struggling to move high-horsepower tractors. For the month of April, the Association of Equipment Manufacturers reported a 19.8% drop year over year in retail sales of 2WD tractors rated 100+ hp. According to AEM Senior Vice President Charlie O’Brien, this represents a 7-year low for April sales in this category. Sales of all 4WD tractors were down even further, declining 54.3% from last year.
Retail sales continue to be dragged down by an accumulation of high-horsepower tractors on the used market. With dealers reluctant to accept these units as trade-ins, many make their way to equipment auctions, where they bring only a fraction of the price associated with similar models in the private resale market. Examining the data available in EquipmentWatch Market Activity, covering $8.3 billion in total sales for this size class, reveals that over the past twelve months, auction prices for tractors in the 125 to 224 PTO hp range averaged just 49.5% of prices observed in the resale market.
At their highest, auction prices were 35.3% below resale prices. This occurred in November 2014, when sales volume for used tractors began to drop off from the seasonal high in October. The gap between the auction and resale markets was widest in January, which is typically a slow month for auction activity. At that point, auction prices were 69.5% below resale prices.
The disparity between the two markets was driven by a steep drop in auction prices. While resale prices rose steadily from December to February, average auction prices fell 39.9% in January. Prices began to recover by March but dropped 19.5% in the following month, which pushed the gap between auction and resale prices to 49.3%.
Year over year, auction prices were up 11.3%, but volatility in the market makes discerning any short-term trends difficult. Meanwhile, resale prices are down 15.7% compared to April of 2014. Falling resale prices highlight the difficulties that the large inventory of used tractors on the market creates for sellers.