Another characteristic of the farm equipment business that sets Kern Machinery’s territory apart from many other agricultural areas is used machinery. The dealership sells very little of it. “We don’t put many trades on our lot for sale,” Camp says.
This practice gets back to the intensity of farming in the region. It’s not unusual for growers to put 1,000-2,000 hours on tractor in a year. In many cases, trade-ins have 15,000-20,000 hours on them.
“We try to pre-sell trade-ins that have high hours because they’re generally of poor quality and basically used up. Our goal is to pre-sell those units to get some value so we don’t get upside down.”
More often than not “jockeys heading east” will take the high-hour equipment off the dealership’s hands. He says it’s the “implied warranty” that is a concern.
“If we sell something in our trade territory, we feel obligated to service it. We’re generally not comfortable selling equipment with that many hours on it to someone we know and have to live with.”
While the dealership is always looking to improve its absorption rate by increasing service hours, they’re probably not going to make much money repairing old used-up equipment. “Our customers aren’t interested in that type of equipment, so we’re happy if it never gets to our lot.”