It’s Just Good Business
When assigning wholesale values to possible trades, what sources have the greatest and least influence on your decisions?
The Western Equipment Dealers Association, working with Farm Equipment magazine, conducted its 2020 “Valuation Influence Study.” The study was also conducted in 2015 and 2017.
The purpose of the study is to measure the level of influence of industry valuation sources when assigning wholesale values to trades.
A. Brand Participation
|
2020 |
2017 |
2015 |
|
|
AGCO |
14.6% |
12.0% |
11.8% |
|
Case |
25.5% |
24.0% |
26.1% |
|
John Deere |
40.0% |
32.7% |
25.1% |
|
Kubota |
5.5% |
6.0% |
12.3% |
|
New Holland |
11.0% |
12.9% |
18.7% |
|
Claas |
0.0% |
n/a |
n/a |
|
Other |
3.7% |
12.4% |
5.9% |
B. Participation by Dealership Category
|
Primary |
2020 |
2017 |
2015 |
|
Under 100HP |
17.0% |
30.1% |
33.3% |
|
100-300HP |
49.0% |
49.1% |
49.0% |
|
300+HP |
26.4% |
15.7% |
14.7% |
|
Not Applicable |
7.6% |
5.1% |
2.9% |
C. Valuation Sources – Influence weighting: Lowest – 0, Highest – 10
|
Source |
2020 |
2017 |
2015 |
|
Your Past Sales |
8.5 |
9.2 |
8.5 |
|
TractorHouse Auction Results |
6.8 |
6.0 |
6.1 |
|
Iron Solutions Guides |
5.6 |
5.9 |
4.9 |
|
Discuss with Wholesalers |
5.2 |
5.3 |
4.8 |
|
Discuss with Inline Dealerships |
4.9 |
4.7 |
4.6 |
|
Discuss with Competitive Dealerships |
4.8 |
4.6 |
4.6 |
|
Other Auctions |
4.6 |
3.4 |
4.8 |
|
Machinery Pete |
3.9 |
3.3 |
3.5 |
|
Ritchie Bros. Auction |
3.6 |
3.7 |
4.5 |
|
Discuss with Auctioneers |
3.3 |
3.3 |
3.3 |
|
Tractor Zoom |
2.7 |
n/a |
n/a |
A few noteworthy results from the study
- Your Past Sales – Many dealerships are asked why “your own past sales” are not a 10/10 influence. Dealerships shared the following reasons:
- Dealership business system does not resurface past cash retail values.
- If a trade is involved in a deal, a dealership’s business system does not easily identify the actual cash selling price.
- Dealerships have locations in multiple states and provinces. Being miles part, dealerships realize equipment values vary between different markets.
- TractorHouse Auction Results – Steady at the #2 position and growing in influence from 6.1-6.8 weighting.
- Iron Solutions is at the #3 position with a 2020 weighting of 5.6/10. A mid-level weighting for Iron Solutions is surprising and not surprising. The guide is just that, a guide and not the end-all and be-all for used values.
- There are 11 sources on the chart with nine of those having a weighting under 6. This indicates there is skepticism or limited use/influence in using most of the sources. This is a positive sign and suggests dealerships are cautious in using any one valuation source. Dealerships are doing more and broader research, while not relying on one or two sources when valuating used equipment values.
- Machinery Pete scores well in the states he serves. This study is North America wide. There are dealers in states who have not heard of or use Machinery Pete.
- One troubling issue is knowing dealerships are not directly calling wholesalers, auctioneers, inline, or competitive dealerships. Having a core group of trusted advisors to discuss equipment values is key to staying ahead of 1) changing markets, 2) discussing unfamiliar trades, and 3) learning about regional supply and demand issues. Seasoned dealership valuators are on the phone daily with a variety of people to discuss a specific unit’s value or gathering general market intel.
- Tractor Zoom – We have been asked about this a number of times. Tractor Zoom gathers 600+ auction companies sale results. Users of Tractor Zoom can set a number of filters to narrow down searches without having to spend hours searching for a specific model sold through an individual auction company. The platform will list individual auction sale results from the 600+ companies while tracking the average pricing of the filtered sales. It is the easiest, fastest, and most comprehensive method to review and use auction results in your valuation searches.
Sidebar: What we’re learning about used combine listings
After the November 2019 WEDA conference we were asked to track and tally sale listings for used combines. Shown here are the charts we have been using.
For those who have seen the December 2019 to July 2020 charts, please note that beginning Aug. 1, 2020, we adjusted the model year segments. The data is collected from TractorHouse postings.
The bottom line in each chart calculates an estimated additive. We realize every available used combine is not listed. We added 25% to the U.S. listings and 50% to Canada. The higher rate for Canada is due to the reduced rate of dealerships listing on TractorHouse.
For both countries, not every combine is being listed even if the dealership is a TractorHouse advertiser. Adjust the additive as you like.
The listings are by brand, not by dealership network since dealers advertise their competitive used combine inventory.
Canada Combine Listings
- JD units represent 48.6% of the listings and Case IH listings represent 30.9%. Combined, almost 80% of total listings are between two brands.
- Listings from 2010-2016 represent 50.8% of all listings. Currently, supply and demand issues are putting negative pressure on their retail values.
- Except for AGCO-branded units, combining the 2017-2020 and 2010-2016 model years, all brands have more than 77% of their listings in these two segments, with Case IH being the highest brand at 89.1%. These late model, high-dollar listings will require multiple trades in order to washout.
- In the right-hand column of the Canadian chart, every brand, except Claas, decreased listings from July to August with an overall decrease of 238 listings.
- AGCO model years from 1980-2009 are 60.3% of total AGCO listings. Many of these are at an age/value where they will retail as cash-only, no-trade deals.
|
Canada Aug. 1, 2020 |
Model Year 2017-20 % |
Model Year 2010-16 % |
Model Year 2000-09 % |
Model Year 1990-99 % |
Model Year 1980-89 % |
Total % of Total |
|
AGCO |
5 7.0% |
24 33.8% |
26 33.6% |
16 22.5% |
3 4.2% |
71 3.0% -4 |
|
Case IH |
280 37.9% |
378 51.2% |
59 8.0% |
22 3.0% |
5 0.7% |
739 30.9% -66 |
|
Claas |
66 40.0% |
72 43.6% |
26 15.8% |
1 0.6% |
0 0.0% |
165 6.9% 5 |
|
John Deere |
291 25.0% |
607 52.2% |
217 18.7% |
48 4.1% |
12 1.0% |
1,163 48.6% -87 |
|
New Holland |
67 26.4% |
135 53.1% |
41 16.1% |
11 4.3% |
1 0.4% |
254 10.6% -8 |
|
Total |
709 29.6% |
1,216 50.8% |
369 15.4% |
98 4.1% |
21 0.9% |
2,392 -238 |
|
Adjust 50%
|
1,064 |
1,824 |
554 |
147 |
32 |
3,588 |
U.S. Combine Listings
- Case IH and John Deere represent 85.9% of total listings. This might seem positive for the other brands because of their lower percentage of listings, but it does create awareness to the future aftermarket business when the units are retailed. Combines are an annual high-dollar work order.
- Model years 2010-2016, Claas listings are at 66.5%.
- Combining the 2017-2020 and 2010-2016 segmented columns, the brands have the following listing totals: AGCO 46.5%, Case IH 68.4% Claas 81.3%, John Deere 74.2%, and New Holland 61.4%.
- As shown in the right-hand column of the U.S. chart, AGCO, John Deere, and Case IH have significantly reduced listings from July 1, 2020.
- The three oldest model year segments include about 33% of total listings.
- Overall, from July to August, listings were reduced by 679 combines.
|
United States Aug. 1, 2020 |
Model Year 2017-20 % |
Model Year 2010-16 % |
Model Year 2000-09 % |
Model Year 1990-99 % |
Model Year 1980-89 % |
Total % of Total |
|
AGCO |
43 8.4% |
195 38.1% |
151 29.5% |
123 24.0% |
60 11.7% |
512 6.2% -49 |
|
Case IH |
422 18.4% |
1,146 50.0% |
439 19.1% |
287 12.5% |
73 3.2% |
2,294 27.7% -137 |
|
Claas |
38 14.8% |
171 66.5% |
45 17.5% |
3 1.2% |
0 0.0% |
257 3.1% 5 |
|
John Deere |
1,284 26.6% |
2,296 47.6% |
882 18.3% |
364 7.5% |
140 2.9% |
4,826 58.3% -497 |
|
New Holland |
46 11.7% |
195 49.7% |
101 25.8% |
50 12.8% |
12 3.1% |
392 4.7% 4 |
|
Total |
1,833 22.1% |
4,003 48.4% |
1,618 19.5% |
827 10.0 % |
285 3.4% |
8,281 -679 |
|
Adjust 25% |
2,291 |
5,004 |
2,023 |
1,034 |
356 |
10,351 |
Editor’s note: For more information about Dealer Institute programs, podcasts or trainer videos, visit www.dealerinstitute.org or search for Western Equipment Dealers Association on YouTube.
Article Written By Trent Hummel
TRENT HUMMEL is a lead management consultant and trainer for the Western Equipment Dealers Association’s Dealer Institute. He provides onsite dealership training and conducts courses to improve inventory management and business operations.
Hummel’s strategies about inventory turns, aging, and margin have resulted in rejuvenating struggling wholegoods’ departments. His commitment to operational excellence in the management of wholegoods has earned him a reputation as one of the industry’s foremost experts on sales growth and inventory control. Hummel may be reached by writing to trenthummel@yahoo.ca.
