The auto industry is in trouble

[hobbyfrmr]

I agree with bucket, for about 5 years most AG
machine dealers sell new stuff on very low, or no
interest deals, and long payment terms like 10
years. I don't think the mega farms worry about
being upside down on machinery deals. They just
keep trading. It's the guy buying that trade in that
takes the biggest chance. If it works well, very
good. If its a wonky machine, he is stuffed.
Then again, I am jealous. I don't buy anything with
less than 2500 hours on it.

[bucket]

Every time the big guy buys or leases a new machine, he is extending his term an additional year plus the additional payment cost for those five or ten years.

It doesn't seem like a lot because he is accustom to the number. But really is a 250 hour machine that much different than a 600 machine, if treated properly? For what these guys are paying in leases they could actually own a new combine every year instead of trading the fleet off.

To each their own but it seems wierd to fleet trade when you could be owning and trading on 5 year cycles. You still get the best use, warranty and if a guy hits a snag they are not on the hook for a fleet payment. He might have to go a year without trading.

It just means he doesn't have 10 new combines every year, he has 1 or 2 and like the trucking industry has a set mileage/hours to trade them.

[fjlip]

Deere and Case are feeding this stupidity! Wish they would get burned and stop this crap. Big show offs never own a dam thing.

[countryguy]

There is no such thing as zero interest. Just traded off the wife's vehicle. 0% or 4000 discount. Either the dealer is up front about it or it's built into the price.

[hobbyfrmr]

Without talking to the mega farmer directly I do
not really know the facts. I understand the need
for warrantee. I do not believe the machine is
worn out after 5 years.
The best I can understand is they do not want to
own combines. They want to know how many
dollars per acre X amount of combines will take
off their crop and they add that to their cost of
production. I also think they fully maximize this
cost as an expense against income.
So the jealous comes out in me, thinking that, the
mega farms do not want to own combines,
or.....they cannot really afford to own them. These
are farmers waaaaay smarter than me. If it goes
sideways for them, machines go back to dealer
without a whole bunch of equity in them. Pretty
good odds the mega farms profits are being
directed to paying on farmland and offshore bank
accounts.

[wd9]

Exactly hobbyfmr. They are not different then
most other corps that only look at net. You and I
farm very differently. Older good stuff but with
ownership. Not renting each piece and thinking
only about the present year.

[hobbyfrmr]

Two different business models working in the
same industry.