Is there "tractor bubble" out there?

[sixdogs]

We have had the tech bubble, real estate bubble, the FNMA/FHLMC bubble, the oil bubble, the bank bubble and the stock bubble. I'm bubbled out.Now I hear talk of a "toy" bubble that might mean problems for those who loaned money for these consumer desires and now find the loan unable to be paid back.
I would presume this means snowmobiles, motocycles and that kind of thing. I mean, if you lose your discretionary income, anything can be a bubble if you can't pay it back and the value of the asset is below market value of the loan.
CUT tractor sales are slow, I have heard and new prices seem to be very soft. So I ask the question; is there a tractor bubble out there waiting to impact retail and resale prices or is this just loose talk from stuffed shirts?

 

[daTeacha]

The "bubbles" are formed when the suppliers presume there is a never ending source of new customers for their widget. I would say, with the real estate market being what it is, the number of folks moving to newly acquired pieces of ground large enough to justify purchasing a tractor is going to decrease, thus the market will get soft and soon you will be able to find the tractor of your dreams at a lower price than you might have imagined 2 years ago.

On the other hand, with prices of most all consumer goods, including food and fuel, fluctuating rapidly and the value of your income becoming somewhat of a guessing game in terms of purchasing power, having a tractor around to handle chores associated with independent living would be very useful and thus people might prioritize them, causing the cost as measured in terms of hours of your labor needed to pay for the tractor to go up.

All I know for sure is that I am very happy the house, cars, and tractor are paid for, the job is steady and pretty much immune to economic tragedy, and the wood stove has a good supply of wood all cured and ready for this winter.

It could get interesting before it gets to be fun. Or, it could just get to be real fun if all those cheap stocks got picked up by my various retirement plan investors.

In other words, your guess is as good as anyone elses.

 

[MessickFarmEqu]

with the amount of price increases that keep hitting our industry, don't expect that any economic slow down, or added desire for dealers to move inventory can possibly give you a lower price a few months or years from now that what you'll get today.

 

[Opti-Mist]

After the sales dive after 1979, I heard a dealer give these definitions of inventory control:
LIFO - Last In First Out
FIFO - First In First Out
FISH - First In Still Here

 

[Botabill]

In my opinion (everyone with a belly button has one) I predict we will see tractor prices drop drastically in the next 6 months to a year. Dealers will have a hard time moving the stock they have on site so bargains will be the norm. Manufacturers will lay off workers and wait for inventories to clear before stepping up production. I wouldn't dare try to predict what prices will be like in the year plus period. (Should be interesting to see if I was even close a year from now)

 

[ScottOkla]

I think we are nearing the bubble with true farm machinery, and we have passed the real estate bubble. Both of these will impact CUT sales and small attachment sales, but I can't see prices dropping much for new stuff.

 

[ultrarunner]

with the amount of price increases that keep hitting our industry, don't expect that any economic slow down, or added desire for dealers to move inventory can possibly give you a lower price a few months or years from now that what you'll get today.

I'm seeing a tremendous amount of used equipment become available where I am...

When I was Dozer shopping a few years ago the pickings were slim to none. The number of used Dozers for sale has dramatically increased.

I do think new equipment purchases will be skewed based on need more than desire for the immediate future.

Local Rental yards are also liquidating excess equipment... doesn't help the bottom line sitting on the lot.

 

[MessickFarmEqu]

When I was Dozer shopping a few years ago the pickings were slim to none. The number of used Dozers for sale has dramatically increased.

Construction equipment is very easy to come by, and cheap as well. The compact business is not there yet. We've had construction companies bringing in record amounts of equipment for consignment.

The AG business is very strong. Infact, there are many pieces of equipment that your having to wait several month to get. We've seen Case actually canceling some retail orders because they simply can not fill them. This is going to impact pretty much everything over 50Hp. The AG business is a large part of the compact tractor market, RTV market, and Diesel ZTRs.

Having just been at the Kubota dealer meeting, this is a regional thing. I'm in a pretty healthy area of the country. Our sales have nearly matched last year. Dealers in the south seem to have been harder hit. Its all where you live.

 

[sixdogs]

What I wonder about is not the "suggested retail price" or that kind of thing but the supply-demand issue and the availability of credit and desire to use it. For example, any bank that sat on foreclosed housing two years ago has again learned the first loss is the best loss and should have dumped the property way back then.
Now the loss is even greater and desire and credit less able to support a new buyer. They will get even less for a sale today and further depress comperable prices which further impacts the other property they are sitting on. The reason they got the house in the first place was the inability of the owner to pay for it and the need to sell assets to raise cash. Cash became king.
Now go to CUTS. Not the farm stuff right now, just the consumer discretionary purchase.
Should the item be on credit, or worse, financed with a home equity loan on a declining house market value, the need to raise cash or restrict credit could cause the forced sale of assets at a time when others are unwilling or unable to make the purchase. Hence, pockets of limited demand, somewhat regardless of price, unless someone has the cash and is willing to spend it for a discretionary purchase at that exact moment.
I have seen this before--- in the middle 1970's, again in the early 1980's and still again in the 1989 time frame.

 

[mrutkaus]

Good question, just generally speaking without going into the economics of it, I have certainly noticed many new CUTs, often apparently not used much, sitting around here in NW Va over perhaps the last ten years or even more.

Mike