Used Inventory Build Up

Used equipment inventories continue to put pressure on dealers’ bottom line. The latest Dealer Sentiments Report shows a net 11% of dealers says their used equipment inventory is too high compared to a net 7% the month prior.

One dealer says, “Dealers are becoming less willing to lose large sums of money on used equipment to hit market share.”

They continue saying, “The manufacturers need to come up with programs that help move equipment.”

While dealers reported their overall used equipment inventories were up in the month, used combines and used high horsepower tractor inventories did see some improvement. A net 8% of dealers reported used combine inventories were too high vs. a net 29% who said the same the month before. For used high horsepower tractors a net 1% said their inventories were too high, down 23 points from the previous month.

During Deere’s 2nd quarter earnings call with analysts, Josh Beal, director of investor relations, said that while used combine inventories are up from decade lows, they remain below the highs seen in the last downturn. However, used high horsepower tractors have increased more rapidly, he says, and are skewing more predominately to later models. This is driving up the average value of the equipment, he says.

Beal says, this trend in used high horsepower tractors was a key factor in Deere’s decision to underproduce retail demand in North America.

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