The great upgrade debate (long)

[canoetrpr]

I've gotten this bug that has been going around - called the "upgrade bug"

I've often thought that if I had to purchase again I would go bigger. I've got 26 acres - 14 in pasture rest is a forest that I don't do much in. 5 horses. I've got a L3400 Kubota which is just over a year old and has 58 hrs on it - barely broken in.

Thought I'd do some looking to see what it would cost me to upgrade to a larger tractor. This said - I most definately don't *need* a larger tractor. The L3400 has been splendid so far. I use it for bush hogging, snow blowing, driveway maintenance (300 ft driveway), loading and spreading manure and odd projects around the house that need an FEL. Next year will be some landscaping and tree planting.

While the Kubota has been splendid, I have not really found dealers around that give me a real warm fuzzy. Unfortunately this has been my experience with Hondas also ... but the products are great and reliable and I've lived with it with cars by finding a good mechanic.

I'm evaluating four options:


1. The sensible option (my wife put this one on the table) - keep the L3400. It has lost most of what it will on depreciation already, has been very reliable and does everything that I need of it. Best trade in values I am being quoted are ~$4000 below what I paid. I can do better in a private sale but it is a hassle and I loose out on tax savings then.

2. A Kioti DK45HST. Kiotis have not been very popular up here. Seems like they have a much bigger following in the U.S.A. I found a very very good new dealer (who used to sell the smaller Kubotas but now gave up the Kubota franchise and has gone to Kioti). Super super guy. Spent loads of time with me showing me around a DK35. I thought it was a very nice machine. There was something about it that didn't feel quite 100% to me and I only realised after trying the Grand L Kubotas that it was the overall feeling / fit and finish I thought that wasn't quite the same. Maybe I'm just biased to the Kubota feel after owing a Kubota.

Huge advantages of Kioti:
- Excellent excellent local dealer.
- Excellent, excellent price. Bit of a perfect storm here. Kioti dealers are buying in US $ and the tractors are priced to what you folks in the U.S.A. pay. The exchange rate is better than it has been (in our favour) for a long time. In addition to that the dealer is giving me an excellent deal on the tractor to begin with.... Not sure how the DK45 prices compare to grand L in the USA but I can get the DK45 here for close to $5K less than a GL3540 prices out to in Canada!

3. Kubota GL3540 or bigger.

I figured that the GL3540 is more than adequate with the LA723 loader. I plan to pull a 6 ft bush hog. The price up here is quite high. $5K more than what I would pay in Michigan say even after conversion.... for the same tractor. This said, the price difference between an L3540 and L4240 (additional $3.5k) isn't enough to justify not going for it instead with an even better loader. But note that here a L4240 will run $8.5K over the DK45. If I bought from Michigan, it would be about $3K over the DK45 which I consider is fair given it is a tier 1 brand.

Advantages of the GL:
- I LOVE the feel. Drove the L3940 today and it was fabulous. It just felt right. Felt better to me than the DK35 (even though the latter was a very capable tractor).
- No provincial sales tax (8%) - so I'm told, if I purchased in the USA. Only GST collected at the border. That could be another $1600 in savings.
- Who knows what the exchange rate will be 3 to 4 years from now... the advantage of cross border shopping may not last forever.

Disadvantages of the GL:
- Don't think I'm prepared to pay $8.5K over the DK45. If I bought I'd have to work something out so that I bought in Michigan or NY and figured out a way to get it up here. I imagine that this can be done.
- I'd have no warranty if purchased from the US. I wouldn't be surprised if no dealer around here even wanted to service my tractor.
- Not terribly clear if $4000 to $5000 isn't worth making my own warranty especially since I haven't been too exited about the Kubota dealers around.
- Private sale of my L3400 and would have to finance on a line of credit as a purchase over the border will have to be cash.
- Given that the 40 series is brand new, I probably ought to wait a year or two given the lack of warranty on a cross border sale. Then again it is a Kubota.

Option 4. John Deere 3520 / 3720 with a CX loader

I test drove a JD3520 a year ago... will have to go back and evaluate. I quite liked it. It was very ergonomically very very nice....could even be better than the GL ergonomically - would have to drive again to figure out.

Disadvantage:
- Priced similarly up here to a GL3540. The JD3520 would run me about $5K over the Kioti. Again I could save a good $5K with a cross border sale.
- Honestly can't tell but sure sounds like people on TBN with JD 3 series have more problem than those with GLs (the last generation anyway). Kubotas are basically worshipped for their reliability where I live and I'd want the least risk as possible if I did a cross border sale.

Advantages:
- I imagine it will still *feel* right.
- JD is a single company across north america which means that warranty applies in Canada if I bought from the U.S.A. If I end up with a lemon at least I don't have to pay for repairs. I might have a hassle with service from local dealers but I think JD cares about their brand and warranty and would make sure that I got service if I had a real problem.

I haven't really tried the 4X series tractors to compare to the DK45 or the L4240 but I can have a 4120 for less than what I would pay for a JD 3520 in Canada.

A JD would make little sense to buy here given the warranty coverage.... unless I couldn't find someone to truck it for me.

You guys are great at giving opinions (and good ones) and I would appreciate your thoughts on this.

My inclination is probably to do what my wife would prefer at this point. Go with 1. My L3400 will be paid off in < 2 years now. It hasn't given me any trouble and will likely continue to do what I ask. There will always be time to re-evaluate 4 or so years from now and at 200-300 hours, resale ought to be decent.

 

[VABlue]

You've put some thought into this, so you're obviously leaning towards getting something new. I suspect that option 1 is only on the table because the wife mentioned it? In any case, you're projects for next year - landscaping and tree planting... Will a bigger tractor be able to get close in to the desired location? Moving a big tractor close to the house (or any other standing obstruction) has a little less safety margin because you could do more damage quicker.

If you're comfortable with the bigger flavor near the house, keep considering the switch. With the obvious effort you've already put into it, it seems to me that you want it. You'll probably regret not upgrading next year if you don't...

 

[RoyJackson]

Well, you stated you don't need another tractor...or an upgraded machine, so you're doing this on a whim.
And, at 58 hours and a year old, you say the Kubota has went through most of it's depreciation. I think you're way off here.

The last paragraph states you'll probably go with your wife's idea...keep your current machine for a few more years. That's a good idea.

So, if I were you, I'd go with your last paragraph and keep the machine you have now.

 

[Oleozz]

I have a Kioti DK 45 and with 275 hours in a little over a year it has been good. I'm not saying it's any better or worse than a Kubota or JD. I personally like them all and if I could afford it would have one of every brand. You only live once and if money is no object than I say go for it.

 

[MarkV]

With the dealer problems you have had I’m not sure I would be looking at Kubota again and I am a Kubota guy. I just can’t warm up the attitude of “no buy here, no service here” that you have run into in your area.

Also with the deal the exchange rate offers on the Kioti’s there, I would have to like the fit and finish of the other options a lot to pay and extra 8.5K. For that kind of money you could buy a good used older ag tractor for the heavy work and keep yours for the detail and FEL work. Don’t tell the wife it was me that added an option #5.

MarkV

 

[shane]

I'd say the best thing you can do is go take a cold shower and get over it. I think you'll be happier in the long run since your tractor is already doing everything it needs to. It's called learning to be content. The man who learns to be content can have everything he wants.

 

[Kendall69]

I had the same thoughts about the Kubota I purchased - scared of warranty issues- and close dealer service. My local dealer was BAD.

Well, those fears never did transpire. I purchased it from a dealer 1500 miles away, it came off the truck, and I ran it hard for the next 9 years and NEVER went to the dealer.

I think anyone who has ever owned a Kubota loves the fact that they "rarely" ( seems much less so than other mfgs) have to go back to the dealer, so when thinking of switching brands get scared...like I am today.

I want to try a different flavor, but sure don't want problems.

 

[R_Walter]

I say listen to your wife. [Of course, my wife thought that the L3400 would be plenty of tractor for me.]

 

[BlacknTan]

When I bought my Kubota B-7800 last year, I felt it was a little big for my needs. After runnin' it for a year, it seems just right.

Buut, I have been looking at the Kubota literature, and the 40-45 h.p. class looks like it might suit me better by next year...............

 

[jmc]

Option 6 might be to keep the L3400, a proven performer, and spend the upgrade money on hydraulic options, and/or more implements. I just got back from an Ontario fishing trip and it looks like they could use a few more grapples up there. If you have a loader for front weight, you still may be able to pull the 6 foot BH thru medium weeds, then slow down or overlap more in heavier stuff.

John

 

[n8wrl]

Your target L3540 (or bigger) doesn't seem like a big enough jump to justify the trade. I went from L3130 to L5030 with just about the same number of hours as you and I think it was a very good call. But my main problem was pulling a 6' bush-hog so as to cut wider than my tires. Couldn't really do that with the 3130 up hills and in the scrub.

I think I have to agree with the crowd - as much fun as it would be, get a few more hours on your 3400 and keep shopping. That's fun too!

-Brian

 

[Kyle_in_Tex]

Upgrade? Most of the machines you are looking at are slightly more optioned tractors with slightly more HP.

An upgrade to me would be for one of the machines you're looking at WITH A CAB!!! You need one for the cold and I need one for the heat and cold. I just can't afford it right now because I was stupid and stayed in manufacturing 25 years ago when I had a chance to get out. (Another long story, JDCAN can explain)

Otherwise, common cents (pun intended) tells me you don't want a $4000 whack in the pants just yet.

Let this be a lesson to everyone else. Do your research. Go $4000-8000 over budget now and get the tractor of your dreams and enjoy it for the rest of your life. This way, you won't ever have to get bit by the upgrade bug..If you do this you'd better get the cab with the reclining seat as the spouse may have you sleeping in it.

 

[swampvol]

I agree with the last three posts.

If you're needing a 6ft hog for your pasture, the 3400 is plenty capable.
If you are going to upgrade.....then UPGRADE.

I'm 38 and can see myself going through the 3400 and another tractor before my time's up. I figure by the time I'm 50 or so I will want and deserve the luxury of a cab w/ac, telescopic hitch and some more umph....if I got it now I would have nothing to look forward to.

 

[canoetrpr]

And, at 58 hours and a year old, you say the Kubota has went through most of it's depreciation. I think you're way off here.

Hi Roy.

Thanks for the sensible thoughts. Can you clarify this point you brought up for me.

I was basing this on what is being offerred to me as a trade in value and what the dealers themselves have been tellng me. I'm being offered $16.5k-$17.5k pretty consistently and new is about $21.5k. Thats about 25% lower. I can't for the life of me find anything used around here less than $15K in the 30 or so hp range with a loader - that is less than 10 years old and less than 600 hours.

I would have imagined that the after say another 3-4 years and say another 200hrs it would be hard to justify too much lower than 25% in depreciation. I know that when I was looking for used, late model low hour machines were snapped up pretty quick in a private sale anyway.

 

[DmansPadge]

With only that many hours in a year... it doesn't sound like you need to upgrade. I would expect somebody that needs a bigger tractor to have at least several hundred hours on it in a year. If you want to upgrade... go for it!! But if you only put 58 hours on your "small" tractor in a year I think it would be hard to justify it.

Enjoy!

 

[canoetrpr]

Wait a second... has my wife been talking to you guys about this?

In all seriousness, I appreciate all your thoughts and I expect that I will be doing the sensible thing and waiting (or else getting a cab that I can sleep in!).

FWIW, now that I have had a chance to try out the GL 3xxx series side by side with the L3400, I'd say that there seems to be quite a difference in the tractors - physical size alone. HP is only a single measure. Though I do agree that when I do go bigger it will probably make sense to look at the GL 4x40 or GL5x40 or similar.

 

[RoyJackson]

Hi Roy.

Thanks for the sensible thoughts. Can you clarify this point you brought up for me.

I'm basing this upon an informal study I did when looking to upgrade from a Deere 670 to a machine with more PTO HP. The little 670 did all I wanted, but didn't have adequate HP for a chipper.
Although I had focused on Deeres, they weren't the only machines I was looking at (NH TC-30 and Kubota B7800 were solid contenders).
Anyway, the results were (for the Deeres) was maximum depreciation was after about 5 years of the models I studied. These machines were all used and 1990-2000 models (this study is about 3 years old now). I didn't include any tractors with more then 1000 hours.
I did not break it down to percent depreciation per year. I just looked for when the price curve stopped dropping and flattened out.

After reading your post, I calculated what my current machine's depreciation was from new. I bought a 2003 model in mid 2004. The original price was ~ $15500 and the sale price was $12500 (leaving out sales taxes) which comes to about 20%...not too far from your numbers for the Kubota.

So...it appears the sweet spot for selling is about 5 years (for the models I looked at). The tractor value has dropped about as much as it's going to and you won't be competing against newer models with better financing.

Now, this is totally unscientific and the sample size was pretty small (and all models were in the mid-Atlantic area).

BTW, since I never bought the PTO chipper and the amount of acreage of brush cutting I was doing (to justify the 790) has decreased, I'd been better off sticking with the 670.

Anyway...that's what I did. Although this was based upon Deere prices, I think it's fairly safe to project this informal study across the board, at least with Deere, Kubota and New Holland.

I'm really surprised the Kubota's depreciation was that much (~25%) in the first year. I didn't expect it to be that much.

 

[IslandTractor]

First of all, I agree with your wife, she sounds like a very reasonable woman. Also, you haven't given any compelling reason to move from low thirty horsepower range to larger and the fact that you've only put on 50 some hours in a year implies that you can easily manage the tasks at hand with the L3400. That said, I'm in a similar position but have decided to upgrade. So, when you approach this issue again, I suggest you take a slightly different tack.

First important step: get the wife to think you need a new and bigger tractor, you poor dear. In my case I took on some serious additional acreage through volunteering for our local land conservancy organization. Area to be mowed and otherwise cleared of brush and weed trees jumped from 5 to approx 20. Second, I went out and started working on the additional acreage with my highly capable but too small Kioti CK20 and returned from the battle scene with all manner of supportable complaints, injuries and damage....all related (clearly) to having a too small tractor. Third, I jumped (quietly) when she suggested that I might need a larger tractor to do this work and still have time for the family etc. I did not need a second discussion on the topic and considered her suggestion to be all the permission a guy ever needs. Upgrading for the sake of the family! Sweet. Fourth, I decided to double the tractor size (power), not just make an incremental change. Bottom line is that I should be getting a new Kioti DK40se HST with bigger mower, BH90x and a few other toys later this week and will trade in my trusty and efficient CK20 TLB. I'll double horsepower, more than double FEL lift capacity and double weight. Of course I need to trade or sell almost all my current implements --keeping the QA grapple and tree boom but the rest will be upgraded so that is an additional expense. In my case the depreciation on the Kioti CK20 TLB trade was less than 18% after two years/180hrs of ownership so that was not too hard to accept. Overall it seems to me a worthwhile upgrade that is perfectly justified by the promise of increased family time. Not sure about trading seat time for dish duty but a man has to be willing to make sacrifices...

I'm not sure you need a bigger tractor based on prior discussion but if you do I'd certainly suggest looking at the 40+ hp size as there really wouldn't be enough difference between the 35hp L3400 and a 37-40hp GL tractor to justify such a move. I also looked at the same tractors you did and for me, a current Kioti owner, it was simply a no brainer. Much more bang for the buck with the new DK line. This is a tractor not a sports car so "fit and finish" was way down the list in importance to me and was certainly not worth the almost $10K extra for an equivalent size Kubota or JD set up. Fit and finish on my CK20 has been generally excellent so I don't see Kioti as lacking in this area even if one could point out some advantages with the other orange or green brands.

 

[canoetrpr]

Anyway...that's what I did. Although this was based upon Deere prices, I think it's fairly safe to project this informal study across the board, at least with Deere, Kubota and New Holland.

I'm really surprised the Kubota's depreciation was that much (~25%) in the first year. I didn't expect it to be that much.

That is a sensible analysis Roy. Thanks for sharing. I'd have to agree that the 5 year mark sounds like a sensible point to trade/sell if one were going to.

I haven't really tried to bargain at all on the trade so this might be a reason why I'm being quoted that much of a knock. All though I did have one dealer tell me that If I told him what I wanted and he found a customer who was looking for a new L3400 and would want to save a couple thousand on a barely broken in machine, he could contact me and that way both deals would happen - he'd be able to sell my trade right away and I'd get a good price for it and he'd get a deal from me on a GL tractor.

So far he's been the fairest of the dealers I've talked to around here. I never did name him a price but I think that loosing no more than $2K on the new price would be reasonable. I know that I would have jumped at a 57hr year old tractor for $2k less and I'd throw in my toothbar to boot.

There is something else that occurs at around the 5 year mark IMHO - particularly in favour of 'economy' models. New models come out and used buyers don't necessarily know what the difference in MSRP was between the economy models and the ones with more luxuries. Not many used buyers look at a 30 hp tractor and want to pay much more for the economy L vs. standard L.... regardless of whether or not I think it would be worth while. I think that economy models benefit from this as they don't depreciate as much as the non economy ones do. At the end of the day as a used buyer I was just comparing basic capabilities of tractors in the same HP range - that I could drag a 5ft bush hog with. Something like HST vs. non HST will make a difference in value but past that other features tend to depreciate fast. Maybe I'm wrong but that is what I noticied anyway.

All in all very sensible advice overall. Thanks.

I think that the sensible course of action is to re-look at this another 4 or so years from now and see if it makes sense then.

 

[RoyJackson]

There is something else that occurs at around the 5 year mark IMHO - particularly in favour of 'economy' models. New models come out and used buyers don't necessarily know what the difference in MSRP was between the economy models and the ones with more luxuries. Not many used buyers look at a 30 hp tractor and want to pay much more for the economy L vs. standard L.... regardless of whether or not I think it would be worth while. I think that economy models benefit from this as they don't depreciate as much as the non economy ones do. At the end of the day as a used buyer I was just comparing basic capabilities of tractors in the same HP range - that I could drag a 5ft bush hog with. Something like HST vs. non HST will make a difference in value but past that other features tend to depreciate fast. Maybe I'm wrong but that is what I noticed anyway.

I agree with your assessment on the options or creature comforts depreciation. Since (IMHO) they're mostly sizzle (and no steak)...new sizzle looks better then used sizzle. So the guy looking for sizzle will go after the newer machine.
From a "quality" standpoint, creature comforts add cost, but not much value. That's even more applicable when used (as the buyers are a different type). Of course, "value" can be quite an intangible attribute.
Simple machines don't cost as much...but I don't think most buyers of the 790s, TC-30s and B7800s will lose as much (simply because they didn't pay as much initially).
Now, a caveat... The lesser known brands depreciation may be pretty steep. Although they may have been around for years, they haven't been in this US (or North American) market for years. Until Kioti, Mahindra or others reach the name recognition of Deere (probably not going to happen) or Kubota (may happen), they just won't have that resale value. Not in my opinion, anyway...

I should do my informal study again in 2010...just to see if the hypotheses hold up...I'll put that on my calendar.