While Deere held the top spot in the resale market for industrial tractors in 2013 in all but fifteen of the continental US states, Caterpillar made a strong resurgence in 2014 to claim several key states.
Key Takeaways for Decision Makers
SELLER: Buyers close to state borders may be incentivized to cross them if prices drop significantly.
CONTRACTOR: Caterpillar and Deere industrial tractors are the most common manufacturers on resale markets in most states.
Do construction manufacturers have regional strongholds in the resale market? That’s the question we asked over the past several weeks as we researched state by state variations in the industrial tractor resale market. As it turns out, they certainly do.
Taking a survey of EquipmentWatch’s extensive resale data for industrial tractors in the continental United States from 2013 and 2014, we divided them by state and then awarded the top manufacturer position to the company which had the most units listed that year. In this dataset, industrial tractors include tractor-loader-backhoes, tractor-loaders, and bare industrial tractors.
Several key factors emerge immediately on viewing these maps. Primarily, the resale market is dominated by two companies—Caterpillar and John Deere. In both 2013 and 2014, Deere and Caterpillar each saw resale volume nearly twice that of their next closest competitor, Case. In 2013, Deere was the top manufacturer in terms of resale listings in all but 15 states, with the heaviest concentration in the Northeast, Central, and Midwestern regions of the country. Caterpillar, on the other hand, led the Western and Southwestern regions. Case had a strong presence in nearly every state, but not enough to unseat either Caterpillar or Deere as the top resale manufacturer. However, in North Dakota in both years, Case industrial tractors totaled more than their competitors combined.
Last year, Caterpillar saw a large upswing in industrial tractor sales volume. National resale numbers grew from just under 35,000 units to over 55,000 units in 2014, while Deere’s resale listings actually decreased by 1,500 units. Each state in which Caterpillar moved into the top position shared at least one border with a state led by Caterpillar in the year before. This spread effect is likely a result of increased model volume, but it could also be the result of increased willingness by buyers to cross state lines for better deals. Basic supply and demand dictates that higher supply leads to lower prices; in states with higher numbers of similar products, prices may have fallen just enough to incentivize buyers in nearby states to incur transportation costs and additional taxes.
If these trends continue into 2015, it is likely that the resale market for industrial tractors will show continued stratification by region. While it is doubtful that Caterpillar will become the top-listed manufacturer in the Deere-strong Central and Midwest regions, it may become the highest-listed manufacturer in states that shared multiple borders with Caterpillar-centric 2014 states like Idaho, Georgia, Oklahoma, or Nebraska.