What’s the state of the used combine market?

I have referred to the used combine market as the friend who buys all the beer for the party but only shows up for the last 30 minutes of fun. The combine market is the last to see a run-up in values and the first to see prices decline. Some of that is from the fear of having too many combines on the lot with how fast they can wreck a dealership, and some of it comes from how long it takes to sell a combine if a selling cycle is missed. 

Combines are the second most important piece of equipment on the farm. The odd thing about combines is that they are the most straightforward piece of equipment to sell new, next to a tractor, and the hardest piece of equipment to sell used. 

The rising price of new equipment has a direct trickle-down effect on the price of used equipment. As equipment supply chain issues resolved, a glut of used equipment, especially combines, hit the market all at once. 

Auction results

The auction market saw a lot of used combines in late 2022 and picked up speed in the summer of 2023. The auction inventory of 10-year-old and newer combines was in high supply, with an auction conducted by Merit Auctioneers on Aug. 31, 2023, serving as the high water mark of the summer. The sale was online only, selling 35 combines, 17 platforms, and a number of corn heads. For the purpose of this article, I referenced only combine sales data from year models 2020 to 2023. 

The illustration shows the decline in the average sale price and the increase in the cost per hour. The deprecation is within normal limits considering the year and hours from sell to sell. The issue with used combines and all used equipment is that the price of new equipment has skyrocketed over the past three years. The equipment supplied and used on dealer lots outpaces demand and looks like it will in the foreseeable future. These factors affect auction values as a whole, driving values down. 

Incentives and interest rates

Other factors plaguing the used combine market are interest rates and OEM incentives. Most incentives revolve around low interest. AgDirect has a published interest rate of 6.95% for five years or less and 7.15% for up to seven years. I have seen interest rates from OEM Captive Lending Arms as low as 2.9%. With the average price of model year 2020 to 2023 combines coming in at just over $515,000, according to tractorhouse.com, interest rates matter. In some cases, buying a new combination instead of a used one might be a better deal. 

I wanted to see what a deal would look like when factoring interest rates. I went to agdirect.com and used the calculator function to figure out these payments.

• New combine price: $750,000 with 20% down means $600,000 financed
• Used combine price: $515,000 with 20% down means $412,000 financed
• Difference in price: $188,000
• New combine interest rate: 2.9% for seven years making the payment $96,113.84
• Used combine interest rate: 7.15% for seven years making the payment $77,163.82
• Difference in payment: $18,950.02 per year

Several things factor into the additional cost, but one of the most significant opportunities the new combine offers is the speed at which equity is built compared to the used combine. OEM programming of new equipment affects used equipment as much as a depressed market. 

Options are out there

Another reason many combines have been shipped to auction is the pace at which the buyer can purchase. Buyers have plenty of options to weigh before they have to make a decision. The number of units on dealers’ lots and on the auction block has buyers looking at price as much as anything else. Buyers are waiting to find the used combine they want at the price they want to pay, and as 2024 progresses, they will find what they have been looking for sooner or later. 

As I look at the used combine market, there are several pain and pressure points to be aware of. Used combines have been managed well compared to other equipment segments. If you are in the market to buy a used combine, don't let this opportunity pass you by. The market has plenty to pick from, and most of the inventory is three years old or newer. 

For more on used equipment, listen to my episodes on the Successful Farming podcast on the last Monday of each month. Aaron Fintel and I explore current market conditions and factors driving used equipment. Tune in to the Moving Iron podcast, where I track the economic drivers of the farm equipment business, and check out movingironllc.com for everything related to Moving Iron.