Kubota still offering 0 percent financing

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It will be impossible to prove it to you directly as I would need to get the agreements from various manufacturers and different dealers. I know from word of mouth with various dealers and various manufacturers that this is a very common practice among equipment manufacturers.

To whit this is an excerpt from a North Dakota law pertaining to how manufacturers can interact with dealers.

"This subdivision does not diminish the manufacturer's, wholesaler's, or distributor's ability to provide volume discounts, bonuses, or special machine ordering programs commonly used in the industry."

The law specifically calls out the fact that such practices are common in the industry and not prohibited.

North Dakota Century Code Title 51. Sales and Exchanges § 51-07-01.2 | FindLaw

North Dakota Title 51. Sales and Exchanges 51-07-01.2. Read the code on FindLaw

codes.findlaw.com

I am fully aware of outdoor equipment providers having tiered purchase agreements as I experience that myself. Tractor dealerships offering ancillary outdoor equipment sales is a very common practice as is tiered pricing policies. I thought I made it clear of my targeting question as it applies to tractors.

You made a blanket statement contrary the truth of Mahindra tractor providers same pricing policy and wanted to know what you know specifically, of some other tractor corporates, purchase and sales procedures to have made the statement.
It appears that you do not know anything else as it applies to this specific arena so you could of just said that as rScotty did.
To "allow" bonus or incentive wholesale pricing does not mean a company "has" to do so.

 

[Torvy]

I am fully aware of outdoor equipment providers having tiered purchase agreements as I experience that myself. Tractor dealerships offering ancillary outdoor equipment sales is a very common practice as is tiered pricing policies. I thought I made it clear of my targeting question as it applies to tractors.

You made a blanket statement contrary the truth of Mahindra tractor providers same pricing policy and wanted to know what you know specifically, of some other tractor corporates, purchase and sales procedures to have made the statement.
It appears that you do not know anything else as it applies to this specific arena so you could of just said that as rScotty did.
To "allow" bonus or incentive wholesale pricing does not mean a company "has" to do so.

Frankly, I don't care that Mahindra has a different policy than most. Maybe that is another reason so many dealerships dump Mahindra (though my sources say it is more about lack of warranty support). My point is that the norm in this business is for manufacturers to offer incentives and tiered pricing for dealerships. It is not the type of thing they are going to quote on their website. My dad and two uncles owned IH dealerships. I know a lot of people in the business. Some of the incentives are across the board discounts on inventory and floorplan. Others are model specific deals. This includes access to "hot' models that are harder to find. It doesn't really matter. I know what I know and regardless of what I say or what I can show you, you will not believe it anyway.

 

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I asked if you specifically KNEW about a corporate tractor company differentiating their pricing policy for the pure sake of an extended knowledge base. How that helps people here who are thinking of purchasing a tractor is dependent on if the bargaining aspect of said dealership perhaps having a wider leeway dependent on particular branding.
For instance, if someone ventures on the property of say a Kioti dealership and sees 60 tractors, someone with knowledge could say, "yes Kioti has tiered pricing over a certain amount of purchases". If you did, I would certainly believe what you state and it could help others with their negotiations. This is what I offered in regard to Ariens/Gravely outdoor power equipment.
We sell that branding and is how I know tiered pricing is applicable here. Just because it is applicable for an off brand we sell, does not mean it applies to the tractors we also sell.

Again, you take it upon yourself to "surmise" Mahindra having a different policy than most and you do not know if that is true or not and then make up something about that possibly being a reason for dealership failure. "I know what I know and regardless of what i say yada, yada yada". It is more like "I don't know what I know but I'll say it anyway" ..

The only way you would know is if you were behind the scenes of a particular tractor company and could knowledgeably state what you're claiming as it applies to tractor purchases.
Accuracy is all myself and others are looking for here and "I don't know" would have been very accurate and ok to say..

 

[Torvy]

I asked if you specifically KNEW about a corporate tractor company differentiating their pricing policy for the pure sake of an extended knowledge base. How that helps people here who are thinking of purchasing a tractor is dependent on if the bargaining aspect of said dealership perhaps having a wider leeway dependent on particular branding.
For instance, if someone ventures on the property of say a Kioti dealership and sees 60 tractors, someone with knowledge could say, "yes Kioti has tiered pricing over a certain amount of purchases". If you did, I would certainly believe what you state and it could help others with their negotiations. This is what I offered in regard to Ariens/Gravely outdoor power equipment.
We sell that branding and is how I know tiered pricing is applicable here. Just because it is applicable for an off brand we sell, does not mean it applies to the tractors we also sell.

Again, you take it upon yourself to "surmise" Mahindra having a different policy than most and you do not know if that is true or not and then make up something about that possibly being a reason for dealership failure. "I know what I know and regardless of what i say yada, yada yada". It is more like "I don't know what I know but I'll say it anyway" ..

The only way you would know is if you were behind the scenes of a particular tractor company and could knowledgeably state what you're claiming as it applies to tractor purchases.
Accuracy is all myself and others are looking for here and "I don't know" would have been very accurate and ok to say..

I know 100% that most manufacturers of tractors who sell in the US have dealer incentive plans that give better deals to dealers who meet certain goals. IH certainly had them. What I cannot do is point you to proof. I showed you proof in a legal document, but you decided that since Mahindra doesn't give your dealership any incentives, of which you are aware, then no one does. You saw proof and ignored it. Nothing I could say would be more meaningful. What do you think a 5-paw dealer is all about? Bragging rights? No, it is about being able to turn more volume due to lower cost of goods (or make more money per unit).

 

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I know 100% that most manufacturers of tractors who sell in the US have dealer incentive plans that give better deals to dealers who meet certain goals.

Yeah ok. Evidently you know no such thing or else you would be able to name who does.
A "Five star dealer" was about the premises being kept attractive. Sufficient accommodations for clientele, demeanor of sales people toward customers, knowledge base of sales, proof of after sales follow up and basically what positive opinions clientele offered the dealership. It was NOT always about the amount of sales.

You keep throwing red herrings about what IH did 50 years ago, what North Dakota allows and then attempt to throw it on me for not accepting what you call "proof".
I asked a simple question...several times. You fail to answer each time so I'm done going round and round.
If you're going to spout off, at least be accurate.

 

[DonaldP]

I knew going in from Kubota's website that they were offering 0% financing to qualified buyers OR $2700.00 cash back on the model that I wanted which was a SVL 75-2 compact track loader. I had already shopped locally and none of the dealers ever mentioned the rebate and the prices that they gave me were considerably higher than the out of state dealer that I bought from, I had went to an auction to bid on a skid steer and just couldn't bring myself to give what they were going for, for a machine with no warranty and unknown history, so I just happened to stop in at this Kubota dealer on my way home and within less than an hour had a price that was far less than any local dealer had offered,we discussed the 0% financing and he ran my credit and told me I qualified so it was at that point that I asked about paying cash and he told me about the $2700 cask back or off the price of the machine, well that matched up with what the website program said and I felt like this was the most honest and as fair a price as I had been given so we made the deal. I was going to buy the machine from him whether he gave the $2700 off or not as even without that he beat local by more than 5k, I would have just elected to go with the 0% financing if that had been the case.

Well that was a well found dealer!

Nice job.

I'm feeling the pinch here for new and am basically saying why jump at a time when demand is high and supply is not ... it will only cost more. I can wait, but waiting is not an option for others for many reasons.

 

[Alan W.]

Dont know about incentives or tiered pricing but my buddy just went shopping for a L4701. Negotiated with two dealers and they came down on the price but the funny thing was they both stopped at the same amount.

 

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Dont know about incentives or tiered pricing but my buddy just went shopping for a L4701. Negotiated with two dealers and they came down on the price but the funny thing was they both stopped at the same amount.

If they have "0%" financing, they are only allowed to negotiate to a certain point. They can only cut into their financing charges imbedded within the purchase price to a limited degree as ordered by corporate..and they do not have to even give this discount if they wish not to.
In this case, that number is earmarked at all Kubota dealerships.
We do the same thing with Mahindra sales w stuff that has "0" percent financing.
This is a corporate thing that we have little room to askew from.

With the limited inventory currently available, it is difficult to get product these days. Was talking to a Kubota rep this past weekend at a corporate seminar and he told me orders for his backhoes are 14 to 18 months out from point of order.

We still don't have stuff ordered in January of 2021 and to make it worse, Mahindra is having a price increase in 6 days. How can any alleged incentive or tiered pricing on tractors be accomplished on any mainstream brand with such limited supply of product? The answer: it cannot as manufacturers cannot meet the demand as exists now. We had 50 tractors on order. 32 of them were spoken for before they even landed.
If you find something you want and need it now, best jump on it.

 

[5030]

Must be working as my dealer is basically sold out of units and the lot is pretty bare. He told me he is having a hard time getting new units in as well

 

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Must be working as my dealer is basically sold out of units and the lot is pretty bare. He told me he is having a hard time getting new units in as well

I think another incentive for purchase is the scarcity of product.
People are buying tractors they "think" they may need from when this first thought entered their minds from 5 years ago.
Now they're acting on it.
We had a client who has come in now and again for the past 3 or 4 years, "thinking" about buying a tractor. Nice enough guy and not an "awhole" about it all.
He sits and drives just about everything we have and then goes home and says "I'll think about it". I guess he "thought" about it enough and purchased a 1626 last Thursday.
That tractor has gone up approximately $2800 from when he first came in with yet another price increase in 6 days.
We don't know when we'll get another one. Could be next Thursday or 3 -6 months from now.

 

[5030]

New stock is now a total crapshoot. There is a Branson dealer up town and his front lot is empty other than some used stuff.

 

[Cahaba Valley Farm]

Low interest rates have been there for a long time, they didn't create inflation, they were preventing a recession.

I have to disagree with you on this one Torvy. Low interest rates are what caused all the bubbles including the housing market that are now bursting. The bidding wars which led to the inflated housing prices was a direct result of interest rates that were kept too low for too long. The Fed is to blame for this.

 

[Cahaba Valley Farm]

The key is, not to finance something for 5 years that will be worth ZERO when it’s paid off. IMO, must be worth the interest paid and then some to have been worth financing.

....or the money you would have paid cash for it is worth more in an investment in that 5 years. As you said, there is not any places right now that is a great investment. That could soon change but as it stands on the date of this response there isn't. So it is unlikely that the resale value of a compact tractor is going to retain it's sale price value within the first couple of years of ownership. The only reason you were able to flip your tractor and make a profit is because of supply problems. Once that goes away you will see resale values come back down to where they ought to be. It would usually take about 10 years in a normal inflationary period to get back what you paid for a piece of equipment.

 

[Cahaba Valley Farm]

The problem for most people is they look at a day, a month or even a year and get scared away from investing. If a loan is for 60-84 months, I would invest the cash now. Low prices are a good thing when you are buying investments. By the time the loan is complete, that investment will have earned much more than i paid for loan interest.

Of course, if someone is too old for longer term investments, that is a whole other kettle of fish.

Equities can be a slippery slope Torvy.

 

[rScotty]

I have to disagree with you on this one Torvy. Low interest rates are what caused all the bubbles including the housing market that are now bursting. The bidding wars which led to the inflated housing prices was a direct result of interest rates that were kept too low for too long. The Fed is to blame for this.

The only reason you were able to flip your tractor and make a profit is because of supply problems. Once that goes away you will see resale values come back down to where they ought to be.

Equities can be a slippery slope Torvy.

Not sure that all of these apply across all the country. Housing interest rates around here are back up to about where they were 5 years ago, but that is still well under where they were 10 or more years ago. Yet I agree that we are still seeing a bubble in house purchases as well as house prices - probably because people don't see a better investment - certainly not one that is more secure. From that I conclude that economic security is at least equal to low interest as a driver for the housing bubble.

On supply....Well, that's a media fantasy and entirely regional. We don't have much of it here in the central USA - a little, but not much - and just have not seen much out of the ordinary in supply or distribution. It is made way too much of by people who live in areas affected, but not noticed by others. I blame the media for that and for similar exaggerations. Although some exaggeration is simply due to the huge size of our country and it covering so much area that there are bound to be areas where economies vary. Climates too, for that matter.

Equities.... well, that depends on the equity. A slippery slope? Too general.
It is easy to find stable equities - or gambles - either one. Depends on what a person wants.

rScotty

 

[Cahaba Valley Farm]

Equities.... well, that depends on the equity. A slippery slope? Too general.
It is easy to find stable equities - or gambles - either one. Depends on what a person wants.

Torvy has been implying for years now that he can easily go into equities and make a return that outperforms his debt obligations with financing. Where I take issue with that is it is not a guarantee. He says it like it is some guaranteed sure thing that will happen and you and I Scotty both know that is not fact. What he doesn't mention is the very real possibility that his equity holdings don't outperform his finance obligations and he is left holding the bag and then some.

 

[Hay Dude]

....or the money you would have paid cash for it is worth more in an investment in that 5 years. As you said, there is not any places right now that is a great investment. That could soon change but as it stands on the date of this response there isn't. So it is unlikely that the resale value of a compact tractor is going to retain it's sale price value within the first couple of years of ownership. The only reason you were able to flip your tractor and make a profit is because of supply problems. Once that goes away you will see resale values come back down to where they ought to be. It would usually take about 10 years in a normal inflationary period to get back what you paid for a piece of equipment.

I Think I would have had to take 5K less if demand was “normal”. I knew it was a 50K tractor when I bought it. No idea why it was so underpriced. Name brand, well liked Tractors are pretty darn good at retaining value compared to cars/trucks.
Anyway, I always try not to overpay and try not to sell when prices are down. When you have 15-20 pieces of equipment (or much more) in a business, you have to be disciplined to buy low/sell high.

 

[Torvy]

Not implying anything. Look at the data. 50 year average return is 10%. Inflation over the same period is 3%. This is despite recessions, wars,etc. It is also the market average. This literally means that you can buy a mutual fund that is indexed to the S&P and have a reasonable expectation that over time you will gain, on average, 7% over inflation. So, as long as your interest rate paid is less than 7%, you will gain more than you will pay. (The 125 year average is just under 10%)

The mistake most amateur investors make is that they look in the short term and freak out. You will have low stretches, but in an 84 month loan term, your odds of losing that bet are miniscule. If you have a halfway decent investment advisor, your returns over that time will be more like 15-30%. Is it possible to lose? Sure. It is more likely that any number of worse things will happen. If I take out a 0% (or even 2.99%) loan, I am absolutely certain I will beat that over the term of the loan. If I don't beat it, it would be due to something so cataclysmic that I wouldn't worry about paying it off. I'm talking significant societal breakdown and/or WWIII, or alien invasions, etc.

 

[Torvy]

I have to disagree with you on this one Torvy. Low interest rates are what caused all the bubbles including the housing market that are now bursting. The bidding wars which led to the inflated housing prices was a direct result of interest rates that were kept too low for too long. The Fed is to blame for this.

100% false. The 2008 problem was caused by government policies that pushed lenders to make loans that were bad risks. That goes back to the Community Reinvestment Act. Those loans were a house of cards, not because rates were low, but because the loans were made to people who could not afford them. Regulators made banks take unnecessary risks in the name of fairness. That increase in money available to loan drove up prices unnaturally. The people who were given high risk loans were simultaneously less equipped to handle swings in the economy and less inclined to fulfill those obligations. When the cycle started downward, they could not or would not pay. The contraction happened because banks had to eat those losses and literally had less money to loan (supply), which raised rates and made prices plummet. Like many government ideas, they mean well but have no understanding of how those ideas actually work in the real world.

 

[Hay Dude]

Yep. Low interest rates are not “predatory” loans UNLESS they come with unrealistic terms, penalties, etc.
Otherwise, low interest rates, coupled with sensible payment terms & regulations benefit everyone rich or poor.