Dealers Not Accepting Some Brands on Trade

[ddbackhoe]

Trade in not so important to me as just being able to keep the tractor running. I've never had a problem big enough to actually need an independent mechanic until I got a Mahindra and then I owned it for 9 years before that happened.

Nearest dealers are Kubota/New Holland and JD, but the JD is a corporate chain store.

Most of the discussion has been about Kubota v the Korean manufacturers, but where does New Holland stand these days in relationship to Kubota, Kioti, and TYM in terms of reliability and parts support?

Better than LS, just remember that an LS part with the prefix of MT = NH

 

[ddbackhoe]

The thing I dislike about “off” brands is the potential for lack of dealer support (parts specifically) and lower trade-in values.
For me, my Challenger tractor, a brand recently discontinued, is a little less of an issue since the parent company, AGCO, is still thriving. Dealer support goes on through AGCO dealers. Lots of parts commonality with Massey.

The thing that’s good about discontinued brands is it gives a tractor buyer of lesser means an opportunity to buy cheaper up front.

For this group, Challenger is “off brand“ too

 

[Rdrcr]

This right here.

It's also hard to keep up the false narrative of "resale value" being lower, when you could have two comparable brands, in comparable condition sitting side by side in the used tractor row. Could lead to some awkward silence from the poor sales guy.

That actually leads to more opportunity of making a sale. The salesman doesn’t care about the brand or if it’s new or used…they want the sale. Load the lot with as much diverse inventory as possible and their chances at a sale go up exponentially.

The real issue here is the trade value. The dealers can’t offer what people want/owe on their trade in tractors and some dealers don’t wish to insult potential customers.

Mike

 

[DaBear3428]

The Deere dealer would have done a better job if they quoted you a price on the 5045E which is a little larger than the Mahindra, rather than the 4052M which is a little smaller. The 5045E is a noticeably simpler and less expensive tractor than the 4052M and matches up to the Mahindra in price and features much better than the 4052M does. Generally the dealer pays somewhere between 70-80% of the MSRP for the tractor. They should have given you a quote that was less than MSRP. 30% less than their quote would be quite a bit less than what they paid, they would be selling at a decent loss. Your number was so low that they probably didn't say much because they were so far apart on numbers with you.

There is always room for competition but it looks like there isn't nearly as much room for (another) foreign tractor maker to come in and clean up like there was in the domestic auto industry in the 1970s. The foreign automakers in the 1970s didn't just sell cheaper versions of the current American large sedans, they sold something that was primarily completely different and more applicable to the current situation and was also cheaper. The smaller tractor manufacturers sell either noticeably simpler machines for noticeably less, or sell a comparable machine for a little bit less. Making simpler machines won't make a big splash in the market as unfortunately the buyers generally keep wanting fancier machines (just look at what is posted here, there are people who won't mow their yard unless they are in a cabbed machine) and there are generally enough simpler tractors already out there to take care of much of that market. It would take something the big players aren't making to really break into the market. For example, if a foreign tractor maker figured out how to meet Tier 4 emissions with a regular ol' Stanadyne injection pump and nothing between the exhaust manifold and the end of the exhaust stack except a muffler, and made the same power and got the same efficiency as everybody else, they would clean up.

The foreign auto makers did have to deal with emissions like the domestic auto makers, but it was easier to push a little tiny, light crackerbox of a car with an emissions-strangled engine than a big, heavy full-sized car. There was also the expectation of poor performance right out of the box. You expected poor performance out of a cheap little crackerbox, so when you got it, you weren't disappointed. You were disappointed when the 1975 version of the same model you got in 1970 was a dog in comparison.

yes it would have been better for them to offer something that was competitive with the Mahindra, i do not expect the dealer to sell me something at less than their cost, we all need to make a living, but it is not my fault that JD was not price competitive with the competition or that the dealer was not smart enough to offer me some other option that was competitive, that is kind of my point, in this case Mahindra offered me a compelling value and JD could not / did not compete or offer any option that was competitive. at the end of the day i cannot / will not investigate all of the offerings, i expect the dealer to do that and when their attitude is that they are better than the competition so do not need to be competitive to make the sale, they lose.
In the end I like the Mahindra that I bought (my first), but that does not mean that my next tractor will be a Mahindra or that everyone should buy a Mahindra. but the idea that the only options are green or orange is false.

 

[Slowpoke Slim]

That actually leads to more opportunity of making a sale. The salesman doesn’t care about the brand or if it’s new or used…they want the sale. Load the lot with as much diverse inventory as possible and their chances at a sale go up exponentially.

The real issue here is the trade value. The dealers can’t offer what people want/owe on their trade in tractors and some dealers don’t wish to insult potential customers.

Mike

Well, that's a theory, anyway...

 

[Hay Dude]

For this group, Challenger is “off brand“ too

Yeah for sure.
I had a Challenger MT295B.
Heck of a little cab tractor. I loved it.

 

[two_bit_score]

New dealers who are not moving new inventory do not want the competition on their own lot. (Not the only reason, but it is bigger than your believe. )

You threw a new assumption in: “New dealers not moving inventory..” I mostly deal with JD dealers so just my observations, but none of them are ’new’ and none are having problems moving anything. They do take trades of off brand tractors, mowers, etc. they just don’t pay top price for it because it’s not going to bring to bring the money a name brand will.
It IS about being able to move the equipment if they pay too much for it.
Fact is the off-brand tractors just don’t bring the money in the used market as the major brands.

 

[two_bit_score]

For this group, Challenger is “off brand“ too

I saw Challenger tractors working big fields around San Angelo west to El Paso and north through the Panhandle. Usually on tracks. Never figured out why they did not catch on elsewhere in Texas because they were usually always visible at Holt CAT dealerships which are huge and well represented throughout Texas.

 

[Yander]

The thing I dislike about “off” brands is the potential for lack of dealer support (parts specifically) and lower trade-in values.
For me, my Challenger tractor, a brand recently discontinued, is a little less of an issue since the parent company, AGCO, is still thriving. Dealer support goes on through AGCO dealers. Lots of parts commonality with Massey.

The thing that’s good about discontinued brands is it gives a tractor buyer of lesser means an opportunity to buy cheaper up front.

Understandable, since you make a living with tractors. I would be the same way if my bread was buttered from a tractor seat.

No tolerance for that risk. Don't get me wrong, I want tractor support even for my tractor but I have a much higher risk tolerance for a down tractor than you do. Now, what would scare me is the total inability to find a part or dealer within a reasonable distance.

There are some tractor brands (retailers really) I would shy away from for that reason, not mentioning them because I don't want to start anything

 

[Hay Dude]

I saw Challenger tractors working big fields around San Angelo west to El Paso and north through the Panhandle. Usually on tracks. Never figured out why they did not catch on elsewhere in Texas because they were usually always visible at Holt CAT dealerships which are huge and well represented throughout Texas.

They built the largest (HP) mass produced farm tractors ever built.
Mine has been excellent. They sold fairly well around here.

I think Challenger was discontinued in ‘22 because they are too identical to Massey.
Same thing happened to AGCO tractors. They were virtually identical to Massey & Challenger, too.

Here’s a beautiful AGCO with a 5.9L Cummins. If it was a Challenger, it would have a 6.6L Cat/Perkins. If it was a Massey, it would have a 6.6L Sisu. They would all have the same axles, transmissions and electronics. The interiors would be almost identical. Slight differences in cab rooflines. AGCO is orange, Challenger is yellow and Massey is red.

Sad to see AGCO & Challenger go. I would still buy either one without hesitation. The pre emissions versions were great!

 

[two_bit_score]

Same thing happened to AGCO tractors. They were virtually identical to Massey & Challenger, too.

I put AGCO on my watch list:

 

[Iowa Hillbilly]

A *** changed Bad Boy...lol

Somebody saws off the drawbar.

 

[Iowa Hillbilly]

The difficulty for dealers taking machines as trade-ins has relatively little to do with brand affiliation and everything to do with the change in interest rates over the last 18 months. Everything on the dealers' lots is financed either by bank loans to the dealer or by the manufacturers themselves.

The local and regional banks do the vast majority of lending to equipment dealerships. Those banks have been put under tremendous pressure to hold on to liquidity due to the rise in interest rates. The banks' loan portfolios are heavily tied up in long term loans made over the last 15 years at very low rates.

Those low rate loans from years past are now underwater even if the loans are 'performing' (ie the borrower keeps making payments). As a consequence the banks can't accept any more risk from the dealers.

The dealers themselves have seen their cost of financing inventory rise ~5-10 fold, and what was previously a minor issue is a much larger concern. Their cost of holding used inventory is also likely quite a bit higher for used equipment than it is for new equipment.

The manufacturers are in maybe worse shape. I haven't looked in a few years, but last I checked big green had in excess of 30 billion dollars in equipment finance on their books. All that financing was almost certainly lower than the interest costs on new bond issues. That means big green is now subsidizing the borrowing costs of their previous sales.

I expect any kind of trade in will get hard be accepted over the next year or two. The bright side is there will be some screaming deals for those with cold hard cash to come in and scoop up. Caveat emptor.

 

[hiddentacocatneddih]

You have a tractor, if you kept it nice, that would re-sell for more than you paid for it if you bought it 30 yrs ago.

Is that because of inflation or because its value went up.

In 30 years itll be 60 years old

 

[Hay Dude]

The difficulty for dealers taking machines as trade-ins has relatively little to do with brand affiliation and everything to do with the change in interest rates over the last 18 months. Everything on the dealers' lots is financed either by bank loans to the dealer or by the manufacturers themselves.

The local and regional banks do the vast majority of lending to equipment dealerships. Those banks have been put under tremendous pressure to hold on to liquidity due to the rise in interest rates. The banks' loan portfolios are heavily tied up in long term loans made over the last 15 years at very low rates.

Those low rate loans from years past are now underwater even if the loans are 'performing' (ie the borrower keeps making payments). As a consequence the banks can't accept any more risk from the dealers.

The dealers themselves have seen their cost of financing inventory rise ~5-10 fold, and what was previously a minor issue is a much larger concern. Their cost of holding used inventory is also likely quite a bit higher for used equipment than it is for new equipment.

The manufacturers are in maybe worse shape. I haven't looked in a few years, but last I checked big green had in excess of 30 billion dollars in equipment finance on their books. All that financing was almost certainly lower than the interest costs on new bond issues. That means big green is now subsidizing the borrowing costs of their previous sales.

I expect any kind of trade in will get hard be accepted over the next year or two. The bright side is there will be some screaming deals for those with cold hard cash to come in and scoop up. Caveat emptor.

Yeah, let me know when those “screaming deals” hit.
I see used tractor prices and they’re still about as high as ever.

 

[rScotty]

I equate new car salesmen (and women) to door to door vacuum cleaner sales people, IOW, not much. When we are looking at a new vehicle, we shop on Sunday so no idiots to bother us. We decide what we want and go back on Monday and skip all the BS and buy it. Of course being Fords family, we always get the employee price and no BS.

Wait a minute. You work at farming, machining, AND at a Kubota dealership part time....and now at Ford as well?

 

[rScotty]

SNIP...

The manufacturers are in maybe worse shape. I haven't looked in a few years, but last I checked big green had in excess of 30 billion dollars in equipment finance on their books. All that financing was almost certainly lower than the interest costs on new bond issues. That means big green is now subsidizing the borrowing costs of their previous sales.

I expect any kind of trade in will get hard be accepted over the next year or two. The bright side is there will be some screaming deals for those with cold hard cash to come in and scoop up. Caveat emptor.

The bit about how even a well-serviced loan from previous financing can become a burden when compared to newer bond issues is very perceptive and unappreciated.....or maybe that's just my own bias because I agree with that way of looking at it.

As for "screaming deals for cold hard cash" happening in the next year or two, that also makes sense. But more than a few old fashioned rural farmers will probably join me in being pleasantly surprised if it actually happens that way.

rScotty

 

[2manyrocks]

One of the dealers I was talking with said he was willing to make me a better deal on one of his new TYMs because he was starting to have to pay interest on it.

US debt rating was downgraded from AAA to AA+ this week.

Student loan repayments are coming due in October.

It makes a difference when borrowing money actually starts to cost something.

 

[arrow]

Is that because of inflation or because its value went up.

In 30 years itll be 60 years old

No, I mean right now. That model was produced from 87-97.
Value is dependent on what the market bares.
New tractors go up in price, they bring along the older ones as well.

 

[DaBear3428]

Somebody saws off the drawbar.

that would be a push bar lol