Buy or lease? New or used? Get to know TCO*

Successful Farming - - FRONT PAGE - By David David­son, Prod­uct Man­ager,

Should you buy or lease equip­ment? If buy­ing, should you go with new or used? A fac­tor that can pro­vide an­swers to these ques­tions is the to­tal cost of own­er­ship, or TCO. This anal­y­sis looks specif­i­cally at price and de­pre­ci­a­tion based on av­er­age en­gine and sep­a­ra­tor hours among new vs. 3-year-old com­bines. TCO could in­clude many other fac­tors, but to keep this sim­ple, new prices and de­pre­ci­a­tion of 3-year-old John Deere S690 com­bines are high­lighted.

The red fig­ures on the graph at right show the av­er­age new price of an S690 com­bine in 2012 through 2015 model years. The blue fig­ures show the av­er­age used price of 3-year-old S690s from 2015 through 2018. Val­ues used to cre­ate the chart are ac­tual prices re­ported by deal­ers from across North Amer­ica and cal­cu­lated by Iron So­lu­tions. The gap be­tween the two val­ues rep­re­sents de­pre­ci­a­tion after three years of av­er­age use.

What’s in­ter­est­ing: the price of the new equip­ment has in­creased an av­er­age 2% per year while the value of a 3-year-old unit has de­creased by 2%. The dif­fer­ence be­tween the nor­mal de­pre­ci­a­tion and the price of the new model shows what would be a $52,000 in­crease in TCO when buy­ing a new com­bine in 2018 (as­sum­ing all other fac­tors re­main equal for the next four years).

Don’t throw out the op­tion of buy­ing new just yet.

At press time, I found 1,553 late-model (2014 to 2017) S se­ries (S670 to S690) com­bines sit­ting on deal­ers’ lots. For good mea­sure, I se­lected the low­est-hour S670s on deal­ers’ lots and com­pressed them in the Pocket Price Guide on the op­po­site page. What leaps out after study­ing these ta­bles is the amaz­ing num­ber of low-hour har­vesters on the mar­ket.

Take a look at the av­er­age hours of the S670s (the most pop­u­lar of all the Deere har­vesters). The av­er­age hours of 2014 S670s was just 644. Now check out the 11 low­est-hour 2014 S670s in the Pocket Price Guide. The big take­away from all this data is the great value to be had on 2014, 2015, and 2016 S670s. There are over 700 such com­bines on deal­ers’ lots for $251,000 or less.

I went back to data I kept on sim­i­lar com­bines in 2015 and 2016 (the last time I did a deep-dive anal­y­sis of Deere har­vesters), and I found av­er­ages and ranges much the same then as they are now. I doubt you will see prices for sim­i­lar such com­bines again in the next decade.

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