Used equipment is the elephant in the room. However, our August Dealer Sentiments & Business Conditions Update revealed a slight improvement, with fewer dealers saying their used equipment inventory was too high compared to the previous month. One dealer responding to the survey says, “Sitting on too much used inventory at unrealistic market prices has kept us very conservative when looking at new sales with trade-ins on high dollar items.”
Passively selling used equipment taken in on that shiny new deal no longer works. Many dealers responding to the survey say focusing their efforts on selling used equipment first rather than the new has put a dent in the problem. Yet, inventory in some product categories remains too high for the conversation to go to brand new wholegoods, for fear of the used piling up. Jason Hecht, equipment manager for Case IH dealer Birkey’s Farm Store, says dealers need to get creative to move used equipment. One option, he says is to put together more aggressive financing options or discount options. He also suggests dealers look outside their traditional markets and using the Internet more than you ever have in the past.
The used equipment surplus is a universal problem — affecting large and small dealers alike — and the bigger guys could learn a lesson from some of the smaller dealers out there. Craigslist is becoming a more popular option, says Bill Martel, general manager of Salem Farm Supply (2015 Dealership of the Year). While he won’t put just anything up on Craigslist, he says it works for smaller and older pieces that he knows he won’t make much off of anyways. “Listing the used equipment online is helping with the inventory. It also comes down to being picky about what we accept for used inventory. Bill has passed on sales because we don’t want to be stuck with the trade,” says Carole Lewis, owner of Salem Farm Supply.
Rick Bailes, of Bill’s Tractor in Adkins, Texas, takes a similar view of using Craigslist. “If you want to sell it, advertise it (website, Craigslist, etc.). If we really need to unload used inventory, we will sell it to a wholesaler. If we trade right on it, that is usually what happens to the ‘junkier’ stuff we get. When we get junk, we need to be able to move it quickly and get our money back,” he told us last year in our Q&A on the subject.
Sending used equipment to auction is also an option, but not one Farm-Equipment.com readers jump to quickly. According to a recent poll on our website, 83% of dealers will only auction equipment that’s been sitting on the lot for more than 12 months.
If sending used equipment to auction is more of a last ditch effort to get it off the lot, what are some of the creative ways you’re working to alleviate the problem? What has worked best for you? Use the comment field below to share what’s worked for you.
This is a problem that’s hurting the farm equipment industry as a whole. But if everyone is better at managing used equipment, it makes the entire industry better.
P.S. Keep an eye out for this year's 2016 Farm Equipment Dealer Business Outlook & Trends Survey, which should be in your email later today! Your participation in the survey appreciated.