How can they say John Deere has good resale value?

Jeffrey442 · Mar 31, 2006

I currently own a JD 2210 with a 200CX FEL, 54 inch front blade and 62 inch mid mount deck with less then 25 hours on it, which I purchased in June of 2005. I found a dealer who was almost forty miles away in Ravena, NY. who told me over the phone he would give me 12% off list on a 3320 with attachments that totaled Approx. $29,000.00 MSRP. When I went there with a CD with 31 pictures of my 2210 and attachments, he said " Everything looks like new". He then wrote me up a price quote for $12,000.00 on my trade-in, which was probably a little high considering they have to resell it and make money. The price quote was $29,491.00 for the 3320 with attachments. Which is $200.00 more then MSRP off the JD website. I asked him what happened to the 12% discount and he said" Your getting it on the other end". He was right about that /forums/images/graemlins/confused.gif He had over $2,000.00 in sales tax on top of the quote and when I asked why it was so much with a $12,000.00 Trade in he replied, "It was because you still owe $8,000.00 and thats not tax exempt". I guess that didnt count, they wanted me to pay it all over again. So, If I walked in the door I would get 12% off on a purchase, But because I have a trade in, my Approx. $3,500.00 off (12% over the phone discount) comes off my trade in which brings it down to $8,500.00. My Equipment had a MSRP over $16,000.00 and they want to give me $8,500.00. The way I see it on THIS END, IT HURTS! How can they say John Deere has good resale value?

Steve02 · Mar 31, 2006

I will probably be corrected if I am wrong but here it goes..

When it is mentioned that JD (or any other brand for that matter) has good resale value I think they are assuming that you've kept the tractor (or other item) for a number of years (lets say 5-6 years) and gotten some good use out of it. From what I've seen in life there is only one thing that you could buy, keep 1 year or less and turn around and sell for close to (if not equal to) what you paid for it - and that is a Harley motorcycle.

You've had this tractor less than a year. It's the whole addage as soon as you "drive" it off the lot it loses a significant percentage of its value. I would not expect you to recoup more than say 80% of what you paid for it new; it just isn't worth it to a buyer. I mean, would you want to buy a year old tractor from a private individual, even if it's been lightly used, knowing what kind of interest rate you're going to be paying. That is why, from what you read on TBN, most people it seems will just buy new.

I wish you all the best trying to sell you JD and I hope you can get a price for it that makes you and the buyer happy.

Steve

Jeffrey442 · Mar 31, 2006

I would expect to loose $3,500 to 4,000.00. But to loose $7,000.00 is just not practical Steve! Which is close to 50%. I cant help but wonder how much they make on most deals.

Steve02 · Mar 31, 2006

Jeff,

Honestly, I just sort of skimmed your original post, not diving into the numbers to much. In my opinion, you are correct that that is to big of a loss to take. You may consider selling outright for the 3.5-4k that you were anticipating and do just a straight-up buy at the dealership - then the 12% off is crystal clear.

Steve

browns40 · Mar 31, 2006

Hi Jeffery,

I think JD (&Kubota, NH, MF) would be better described as holding their value than having a high resale... where your machine is basically new, you have only had time to rack up the "off the lot depreciation"...

If you were to price your identical current machine with dealers, or look to sell privately, I believe you would see a far better value than is offered for the trade. You make out better with cash than trade any day.

If I wanted to upgrade, I'd first look for the private sale, walk into the dealer who had the tractor I wanted, cash in hand, the last week of the month and announce:

"I am buying a tractor today. I just finished operating (put in top 2 or 3 competitors names), and really like (features they have your favorite does not), but I need to see what (your brand) has to offer, as I have a soft spot for (USA, Japan, China, Korea, India, etc.)... how about a test drive?"

You are then "game" for them to make a sale/commission/company target, and have more leverage for negotiating the price you expect to pay. Be prepared to head for the door if they won't make the sale, voice your indifferent disappointment and announce your intent to buy from the competition before standing. A good salesman and dealer will see value in volume of sales, even if the individual profit margin is not on target... higher volume gives that dealer more leverage when stocking... they will stop you from leaving if they are able to cover costs on a sale most times

There is an art & game to purchasing, and the buyer holds more leverage in this--you need buyers to be in business (although JD dealers DO seem a little blase about making sales... this may be trained! /forums/images/graemlins/wink.gif). Enjoy the game!

RoyJackson · Mar 31, 2006

Since you owe $8K on your 2210, you're not going to get "that" good a deal. That money has to be paid off somehow.

BTW, I got the same deal from my dealer. These aren't cars and the dealer isn't going to absorb that pay off.

That said...

I did some research on Deere depreciation. These tractors depreciate for the first 4 or 5 years then the used prices seem to level off and remain fairly constant.

As an example, when I bought my '91 Deere 670, I paid $8500 which included a used Befco rear mower, so figure $8K for the tractor alone). The tractor had cost about $11500 new. That's about 25% depreciation over 11 years (I bought the tractor in 2002). I got $7000 when I traded for the 2003 Deere 790. The dealer I traded the machine to sold the 670 for $8000.

So...a buyer will take a pretty good hit if they sell or trade their tractor after a 2-5 year period of ownership. After that, their tractor value appears to stabilize.

After all, a 2 year old tractor is in competition with a new machine with a full warranty. That reduces their sales appeal.

Now, it's not uncommon to see a late 80's or early 90's x55 series Deere (855's especially) to have asking prices of $12000-$13000. Those machines went for about $16000-$17000 new.

Cliff_Johns · Apr 1, 2006

Sell your tractor yourself. You will always get a better price for it, especially if it's almost new and still under warenty as yours is. For the dealer, that tractor would be competing on his lot with new tractors. Is really not a good trade-in for him, makes little business sense to pay as much as you could get in a private sale.

He is trying to do you a favor by putting as much of the cost of the new tractor in the trade-in to reduce your tax burden, but if you still owe 8K, there's only so much he can do. If you sell it privately, and pay off the note, the buyer won't have that tax issue to deal with and you can charge even more.

Your in the exact situation where trade-in makes the least sense.

Cliff

Cliff_Johns · Apr 1, 2006

Just one other observation, if you take 12% off your new tractor's price, then subtract what he's asking you to pay for the tractor after trade-in, that's what he's really offering you for the trade-in. You can do better than that.

Cliff

Alan L. · Apr 1, 2006

Strange about the existing debt affecting the sales tax. In Texas the amount of debt has nothing to do with sales tax. You pay tax on the boot paid, whether it be by cash or loan.

orangebluegreen · Apr 1, 2006

From what I’ve seen, JD appears to be priced higher than say Kubota (just a reference I am up to speed on) to begin with. It appears to me in the resale market buyers are not willing to pay that premium and the machines level out in price. In reality I see some lower prices in JD resale than Kubota, but I suspect it is a supply and demand issue, there appears to be more JD’s found used than Kubota.