How important is a brand name in the wheel tractor market? Thousands of dollars in advertising, marketing, and brand awareness are spent each year by major OEMs in this space, and they’re mostly geared towards the sale of new equipment. On the secondary market, the impact of the manufacturer on the fair market value can be harder to determine. At EquipmentWatch, we have developed a metric, known as the brand premium, to better understand this topic.
In this article, our brand premiums are based off of the past 13 months of average asking prices on the resale channel for wheel tractors within each brand. Average asking prices across all six brands are used as our baseline. The graphs within this article were created by isolating the impact of brand name by holding remaining factors such as region and age constant across more than 780,000 wheel tractor observations. The brand premium is the variance percentage from the average asking price for all wheel tractor brands in our market data. We chose these six brands because they make up over 96% of the used market for wheel tractors. Brand premiums are important to understand because they provide insight as to which brands have the highest perceived value.
Among the six brands of wheel tractors, Deere had the highest overall brand premium at the end of July, while Kubota had the lowest brand premium of the six brands in this graph.
As can be seen in the brand premium graph, Deere and Case IH had the highest brand premiums during the entire 13- month period. In reference to the other four brands, there has been some flip-flopping occurring between Challenger and New Holland and between Kubota and Massey Ferguson. Only two of the five brands had an overall increase in brand premium over the past 13 months, and they were very slight increases. Deere increased from 2.53% to 4.09% and Massey Ferguson increased from -19.51% to -18.36%.
In terms of popularity among the five brands, Deere is clearly the most popular with 70.2% of the overall market share, while Case IH is in second at 13.7% of the market. The rest of the brands, in order of market popularity, are: New Holland, Kubota, Massey Ferguson, and Challenger. In terms of average prices, Challenger had the highest average asking price due to the fact they do not produce smaller wheel tractors, while Kubota had the lowest average asking price because they don’t produce larger wheel tractors.
These pieces of equipment are offered with a very wide range of PTO (Power Take-off) horsepower, which is the metric EquipmentWatch uses to determine the size classes. The most powerful wheel tractors have over 300 PTO hp, as compared to the least powerful, which have about 15 PTO hp. Those very large tractors, such as the Deere 9620R, Case IH Steiger 620, and Challenger MT975E are used for a variety of different things on the largest farms, such as plowing, cultivating, tilling, seeding, and baling. The small wheel tractors are mostly used for lawn care and maintenance for homes, such as mowing and handling small loads.
The brand with the highest overall average age in the graph below is Deere and the brand with the lowest overall average age is Challenger.
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Average age is important to understand because it details which brands are staying on the market the longest. When looking at the age graph, we can see that four of the six brands have average ages at similar levels, around ten years, as of July of 2017, with the other two brands being about two years lower. Deere has the highest average age as of July of 2017, while New Holland falls just below. Case IH spent most of the 13- month period with the third highest age, but was surpassed by Kubota in June of 2017. Challenger has had the lowest average age throughout this 13- month period, but is just about tied with Massey Ferguson as of July of 2017. Challenger was created by Caterpillar in 1986, but was purchased by AGCO in 2002 and produces some of the largest wheel tractors in the world.