The forward-looking statements of major equipment companies are looking at this year with an eye toward a downturn. The past year was nothing to brag about, yet if you look at the chart shared by the Association of Equipment Manufacturers you might find something interesting - that consistent buying trend.
Farm equipment sales have a definite pattern. You know when you need something and that's when you buy. The 2016 line (this from the latest chart available at press time) is the black line that sometimes tops the 5-year average, which may surprise some.
Turns out small tractors did their best to bolster overall sales, when you look at bigger machines, sales were off quite a bit or the year, and it appears that's the overall trend for 2017.
Yet I keep looking at this line, this trend line for sales including the 5-year average, and it's always the same. It's obvious there's little buying in February, you're too busy getting your taxes done, but as planting nears it's time to invest for sure.
Even in a soft year like 2017 may appear to be, equipment needs to be replaced. This trend line is for tractor and combine sales only, not implements. It shows when farmers buy big equipment. And it also shows when you're not buying.
Perhaps the contrarian in you sees that 'low' line as a time to visit the local dealership to see what's out there. February may be just the right time to pick up a bargain, and of course November is slow because harvest is getting finished up. Yet is November a good buying time?
Markets and buying
These trends show when equipment companies are booking their sales. Note that equipment companies get to count as a sale the delivery of equipment to your local dealer. The days of equipment companies "packing the pipeline" to boost earnings figures are over since most market analysts figured that one out during the 1980s.
The key is that when the market is softer, there should be bargains for the savvy buyer who's been saving. Last month we talked about why it makes sense to keep up with a capital purchase plan. The message here is that if you plan to invest, then perhaps you should consider timing that purchase for a traditional "slow" selling time - and this chart offers that 5-year look took.
Of course, you have to be ready to buy. But just like it made sense to book diesel for this year last fall when prices were lower, sometimes it makes sense to book that combine in March for an August delivery date.
Of course, this is just a guide based on trends, you may have other factors that impact buying strategy, but I thought this was an interesting continuing trend, and one I've watched for several years.
Of course, buying new may not be the best choice for 2017, and if that's true, you may be involved in something you haven't done in some time - repairs. The local dealer is of course a great source of service and parts, but on older equipment you may tackling that yourself.
From that perspective, parts recovery services may be a solid choice for some bigger repairs. We used to call them salvage yards, but what these places do today to capture and market equipment parts is far more sophisticated than a guy out back with a crescent wrench.
I spent some quality time a few years ago at one operation and saw how they capture used oil and gas from machines before disassembly to make sure it's properly disposed of; and how they pull the parts with the highest value for sale later. Those are called captive parts, and they're the unique green, red, blue, orange, or yellow parts that are only found on that brand of machine.
Those are the parts you'll need when a big repair comes. And those recovery operations are a great source. For the experienced equipment mechanic on the farm, this isn't news; but for someone working to add a couple more years to a machine for the first time, this is a potential source of support; at a cheaper price. And who doesn't like that?