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