Preselling equipment has several benefits
|By Adam Verner|
The author is a managing partner in Elite Ag LLC, Leesburg, Ga. He also is active in the family farm in Rutledge.
For most of us, the long days in the hayfield and on the silage pile have come to an end, and just like every year, it seems new challenges were presented for us to conquer. We began the year hoping for higher milk and beef prices, but those markets still remained flat.
Moreover, input expenses always seem to be on the rise along with the cost of producing a gallon of milk or a pound of beef. One of the main factors involved is the cost of equipment needed to provide livestock feed.
Some people point to the new tariffs causing around a 4 percent boost in new equipment prices. This is true in many cases, though most manufacturers have about the same yearly spike in their list prices when their new models for the upcoming year are released. We are told this is to keep up with inflation and to help maintain used equipment values.
Though some equipment auctions have been strong this year, premium prices are usually only being paid for select equipment that customers specifically desire. On many dealer lots, there is still old, stale inventory that is highly functional but is not in great demand currently. This has led a lot of dealers to take different strategies when it comes to selling both new and used equipment.
These new sales strategies affect the end user. Some stores have resorted to only wholesale figures, or whatever the auction company will give them, while others seek out the specific trade machines they want and will not take others. Yes, there are a few dealers that will still take anything that runs in a trade.
My dealership falls into a category, too, though not just one answer or plan works for every deal. We are very fortunate to have some loyal customers who are vocal about their equipment needs and wants. We, in return, are as open as we can be about our current options that will suit their needs. Sounds simple, right?
The issues usually come with determining trade values. In some scenarios, our customers have told us what they owe on a piece of equipment, and we tell them what we can pay, which is sometimes a $20,000 to $30,000 difference. Neither of us can take a hit like that on a trade-in, so we both have to walk away from the deal.
Work with your dealer
It is not in our core values to “pad” our trade-in values and then move that inflated number onto the new piece of equipment; this only pushes the problem down the road. The numbers may look good on paper, but now the values of both pieces of equipment have been artificially inflated. Aren’t you better off with the real numbers or values?
The best answer for everyone in the current market is to work with your dealer to sell your trade-in on the open market.
Why would you want to do that?
From the customer’s side, by working with your dealer to presell you can set the price that you want for your trade. Keep in mind, however, that there has to be someone out there willing to pay your asking price, and finding that individual may take some time. Your dealer can help in this regard.
Such a transaction will help ensure that you can get the money you have earned by taking care of your equipment, and the dealer will not inflate the price of your new unit to make the trade value look good. As such, the customer is purchasing the new machine at the true current value.
From the dealer’s point of view, this will enable them to keep fresh trades listed and know what is available in the area for sale; this helps to find buyers for both the new and used equipment faster. Preselling removes the risk of losing tens of thousands of dollars on a bad chopper or tractor deal.
One key to preselling equipment is to keep the lines of communication open with your dealer. More communication between customers and dealers means better equipment and better prices for everyone. So, give this some thought over the next month while finishing up harvest and cleaning up your equipment.
Which is the next piece you need to upgrade, or what is the missing link to your harvest puzzle?
You never know what your local dealer may find if you give them time to present you with options. Those options may be on their lot or in a machine shed close by. There are many more pieces of equipment for sale than what is listed on the internet. Let your local dealer find them for you in your backyard. Speaking from experience, we have presold many pieces of equipment with happy customers on both ends and a grateful dealer in the middle to put it all together.
This article appeared in the November 2018 issue of Grower on page 12.
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