While equipment sales are down, DTN reports some farm machinery dealers are turning to leasing equipment to fill the sales gap. Dealership inventories of new equipment remains high with 37 percent of dealers reporting used inventory too high as well in November, according to Farm Equipment Magazine. Prices for used tractors in the same month dropped eight percent. Creighton University’s Ernie Goss, who surveys the Midwest economy, notes that the current year-end machinery sales in his recent farm equipment sales survey landed at seven on a 100 point scale, down from last year’s 29.5.
While his survey does not include leasing, he told DTN “I can’t say it will bankrupt them, but the direction is definitely going the wrong way.” However, since his survey does not include leasing, it may be under-counting transactions. A new estimate suggests that farm machinery leases now account for 30 to 40 percent of business at a growing number of dealerships.