Are CUT Manufacturers pricing themselves out of the market?

[Tharg]

I am late to this discussion so this might have been said already.

My experience in England is that a hot second hand market fuels a rise in the price in the new market.

The second hand tractor dealers have a waiting list for them and ultimately, it pushes people to the new market because either their number never comes up or they cannot wait.

I was told by a national dealer that the Kubota ek1-26 (new ones) flies off the shelves.

It is also difficult to get exactly what you want, used.

In my case , I want a loader. Well, that really narrows things down to a small pool of available tractors. Then, if you only want to pay so much, need so many hp, not handy as a mechanic so want a newer one, want a certain type of tyre, well you really are up a gum tree.

If you are willing to compromise then clearly things are easier.

There is also the fear of the catalytic converter over 25hp. On top of that, I think that there are just more and more people buying property with land , especially after COVID.

 

[Cahaba Valley Farm]

People should be permitted to spend their money as they wish, even for toys. And banks only care if the lender has income and isn’t a bad risk for repayment. Entire industries would disappear if people couldn’t finance their products.

Some industries are entirely propped up by financing. The tractor industry is one of them.

 

[ultrarunner]

Some industries are entirely propped up by financing. The tractor industry is one of them.

Buy now, pay later is the backbone of consumer commerce… vehicles, homes, appliances, etc…

Cash and Carry would change the face of US commerce…

 

[WM75Guy]

Buy now, pay later is the backbone of consumer commerce… vehicles, homes, appliances, etc…

Cash and Carry would change the face of US commerce…

Sometimes financing makes better financial sense over paying cash. I chose to finance my new Kubota RTV-X over the $300 cash discount. The current Kubota promotional rate is 0% is for 36 months. This year alone the $16,000 price difference after trade-in will earn $587 in my money market account where I keep my readily available cash, at the current 3.67% rate. It will stay there as I will make payments out of monthly cash flow and not draw them from that account.

 

[MJZ]

As long as people keep buying, tractors are not out priced for consumers. It seems people keep buying. Low rates keep demand propped up.

 

[Snobdds]

No, they are not pricing themselves out of the market.

There is a ton of money in the US. A ton. So much in fact that people are having a hard time finding assets to park all this money in. High interest rates can't even contain all the demand. In fact, inflation is headed back up due to the high demand.

People have money and they are spending it.

 

[Cahaba Valley Farm]

Sometimes financing makes better financial sense over paying cash. I chose to finance my new Kubota RTV-X over the $300 cash discount. The current Kubota promotional rate is 0% is for 36 months. This year alone the $16,000 price difference after trade-in will earn $587 in my money market account where I keep my readily available cash, at the current 3.67% rate. It will stay there as I will make payments out of monthly cash flow and not draw them from that account.

The $300 cash discount is a joke. They purposely make it so minuscule that you have to take the financing. Recognize this for what it is which is a finance funnel.

 

[kenmac]

The $300 cash discount is a joke. They purposely make it so minuscule that you have to take the financing. Recognize this for what it is which is a finance funnel.

Usually when someone finances, They also start financing other items like box blade, disc, etc, then they add insurance to the monthly payment. I have bought much better box blades and disc than the dealer is pushing

 

[jyoutz]

Sometimes financing makes better financial sense over paying cash. I chose to finance my new Kubota RTV-X over the $300 cash discount. The current Kubota promotional rate is 0% is for 36 months. This year alone the $16,000 price difference after trade-in will earn $587 in my money market account where I keep my readily available cash, at the current 3.67% rate. It will stay there as I will make payments out of monthly cash flow and not draw them from that account.

I made the same decision for the same reasons.

 

[dodge man]

I’m not sure why they had the 0% when I bought my JD. It was already discounted more than I expected and they had an additional discount if you bought two implements. They had an additional discount if you took the 0% financing for 5 years, $500 as I recall. I asked for a cash discount instead, nope, you have to finance. My trade in covered the down payment and we made a payment once a year, so I had the tractor a year before we made a payment.

I don’t know if they hope people miss a payment so they can whack them with a finance charge?

 

[jyoutz]

I’m not sure why they had the 0% when I bought my JD. It was already discounted more than I expected and they had an additional discount if you bought two implements. They had an additional discount if you took the 0% financing for 5 years, $500 as I recall. I asked for a cash discount instead, nope, you have to finance. My trade in covered the down payment and we made a payment once a year, so I had the tractor a year before we made a payment.

I don’t know if they hope people miss a payment so they can whack them with a finance charge?

I think they cover the finance charges with the required insurance purchase.

 

[WM75Guy]

I think they cover the finance charges with the required insurance purchase.

I wasn't required to use KTAC insurance as TFB was able to meet their requirements. In my case the $300 cash discount works out to 1.9% of the purchase price. Going with 0% means that $300 worth of interest added to the purchase price. It is really a way for someone with less than perfect credit and no cash for a down payment to buy a tractor. If you pay it off early there is no pre-payment penalty. That is a win for Kubota as they still get all the interest as it was rolled into the total price. If you go with regular financing paying it off early saves you some interest.

 

[quicksandfarmer]

The thing to realize is that the tractor is owned by the dealer, but the manufacturer provides financing.

The manufacturer sells the tractor to the dealer, and then the dealer tries to sell it to you. Until the dealer sells the tractors on the lot, the manufacturer can't sell the dealer more tractors. So what's the manufacturer to do if they're not selling? They can't lower the price, the tractor has already been sold. And lowering the price on new tractors just makes it harder for the dealer to sell the ones they already have.

So the manufacturer offers incentives to the customer that effectively lower the price. Subsidized financing is one way. That's also why in the automotive world you see manufacturer rebates to the customer.

 

[dodge man]

I think they cover the finance charges with the required insurance purchase.

I got my insurance through State Farm.

 

[jyoutz]

I got my insurance through State Farm.

Kubota requires KTAC insurance if you do financing through them.

 

[WM75Guy]

Kubota requires KTAC insurance if you do financing through them.

Not true. You have to provide proof of insurance that meets their requirements. I financed a new RTV-X at 0% for 36 months today thru Kubota Credit. Texas Farm Bureau provided a binder and signed off on the coverage form. No KTAC insurance required.

 

[jyoutz]

Not true. You have to provide proof of insurance that meets their requirements. I financed a new RTV-X at 0% for 36 months today thru Kubota Credit. Texas Farm Bureau provided a binder and signed off on the coverage form. No KTAC insurance required.

View attachment 2777948

Maybe the policy has changed? In any regards I’m happy with the KTAC insurance.

 

[Cahaba Valley Farm]

The thing to realize is that the tractor is owned by the dealer, but the manufacturer provides financing.

The manufacturer sells the tractor to the dealer, and then the dealer tries to sell it to you.

That's a good point.

 

[jyoutz]

That's a good point.

Yep. That’s why dealers have little incentive to offer big cash discounts.

 

[dinoedwards]

I can tell you my mf1540, which is classified as a CUT, was most certainly, not a luxury purchase.
It’s used as a machine/tool to get work done, that would otherwise have to done by paying someone else, or manual labor

Guy has a 1998 shuttle model for sale, is that the turbo model and are they any good?