CR10.90 / Lexion 780 depreciation rates

[Feldspar]

Spoke to a NH dealer will not hire out 10.90s because they are concerned about the risk of greater than expected depreciation. Their view is that they will depreciate faster than a CR9.90. Quite strikingly they have around six 10.90s but nearly fifty odd 9.90s, which shows how much smaller the market is for the biggest machines. Their view was that the demand from European farmers for these big machines is much reduced when you step up to 12m headers.

So, looking for opinions on the relative attractiveness of 770 vs 780 or 9.90 vs 10.90 (or whatever make) on the 2nd hand market. Correspondingly, what difference in the rate of depreciation would you estimate between these top models? Does the model make more difference, or is it more the header width?

 

[Mr Charisma]

Although I will never be in the market for one of these new combines I will go and buy a couple of bags of popcorn and sit back and watch the fun over the next couple of hundred pages. ,,,,,, have to say I was disappointed that Brisel went out and brought his new binder without consulting all and sundry but hey ho

Out of interest tho Feldy I went to a talk the other night on the development on the new Ideal combine ,,,,,, might be a game changer in a few years and we all know you have a sentimental soft spot for anything AGCO

 

[Feldspar]

Although I will never be in the market for one of these new combines I will go and buy a couple of bags of popcorn and sit back and watch the fun over the next couple of hundred pages. ,,,,,, have to say I was disappointed that Brisel went out and brought his new binder without consulting all and sundry but hey ho

Out of interest tho Feldy I went to a talk the other night on the development on the new Ideal combine ,,,,,, might be a game changer in a few years and we all know you have a sentimental soft spot for anything AGCO

You can be the guinea pig. Get one and then let me know how you've got on after 5 years.

 

[fudge]

It means these machines are too expensive! NH will make one for you, but only if you’ll pop it on your balance sheet. Depreciation is really governed by the residual value of the machine, but there is a limit to what these Russian guys will pay for combines. Could it be they have their heads screwed on?

 

[Lincsman]

In the grand scheme of needing the biggest combine made because you need to harvest thousands of tonnes of grain over the next year or two, does another £100K of deprecation matter?(cheaper than buying 2 smaller ones) If you then say well the smaller one will save me £100k depreciation and £90k less to buy and it will still do the job, then thats obviously the answer.

 

[Shutesy]

have to say I was disappointed that Brisel went out and brought his new binder without consulting all and sundry but hey ho

@Brisel

 

[Colin]

The only advantage with bigger ones is hp, so chop less /cut higher and no.problem.

 

[Feldspar]

In the grand scheme of needing the biggest combine made because you need to harvest thousands of tonnes of grain over the next year or two, does another £100K of deprecation matter?(cheaper than buying 2 smaller ones) If you then say well the smaller one will save me £100k depreciation and £90k less to buy and it will still do the job, then thats obviously the answer.

It's more a question of this sort of maths:

Making up the numbers a bit to illustrate, say a 10.90 is £380k and a 9.90 is 350k. Expect the former to give 10% more output than the latter. To do the equivalent acreage of the 10.90, you'll need to cut for another hour a day to keep to time. That means combining at higher moisture. An hour at say 50 t/hr at say 19% means very roughly 50*5= 250 quid extra in drying costs. Multiply that over 20 days and you have extra season drying costs of £5k. Arguably you'll be paying everyone to be there for an extra hour (rather than just working faster [in reality fuller trailer loads] in the reduced hours with the bigger combine) with the smaller machine which could another few thousand. Say £7k overall.

Now consider different depreciation rates. £350k depreciating at 17% a year is going to gives you averaged annual depreciation over 5 years of £42k. Now assume a 10.90 depreciates at 20% and you have an annual average depreciation over 5 years of £51k. This gives a difference of £9k p.a. between the two and favours getting the smaller combine and working it harder.

Fiddle around with drying costs, the fact that you have less wiggle room with the smaller machine in a wet year to cut wetter, depreciation rates, purchase prices et cetera and you can make the decision go the other way.

 

[Feldspar]

The only advantage with bigger ones is hp, so chop less /cut higher and no.problem.

Already doing that.

 

[Daniel]

If you're prepared to run several spare tractors and have the staff to sit on them, why not run two or three smaller combines?

 

[Clive]

historically I would think the bigger Lexions have always been the more sought after used ?

ie a 480 was the biggest, now its not a big capacity machine by current rate topping standards, same for 580 , 600 etc as years went on - a 600 once the range topper would struggle to keep up with a mid range current lexion I think ?


so todays big is tomorrow average unless we are saying we have reached to limit of machine output with todays models ?

 

[Clive]

If you're prepared to run several spare tractors and have the staff to sit on them, why not run two or three smaller combines?

agree - x2 smaller is always better than one as long as you have staff to drive them with @Feldspar does

the argument for x1 big machine only really works when a increase in labour and therefore annual fixed costs is required to operate x 2

 

[Feldspar]

If you're prepared to run several spare tractors and have the staff to sit on them, why not run two or three smaller combines?

We've discussed that before in the very long old thread. This one is an attempt to ask, and hopefully shed some light on, a very specific question about depreciation rates. I no longer have the appetite for an 80 page thread. Want to cut to the chase here!

 

[Feldspar]

historically I would think the bigger Lexions have always been the more sought after used ?

ie a 480 was the biggest, now its not a big capacity machine by current rate topping standards, same for 580 , 600 etc as years went on - a 600 once the range topper would struggle to keep up with a mid range current lexion I think ?


so todays big is tomorrow average unless we are saying we have reached to limit of machine output with todays models ?

But quite telling though if even the dealers are reluctant to hire out the biggest model?

 

[Clive]

But quite telling though if even the dealers are reluctant to hire out the biggest model?

It's a big risk for a dealer, a lot of money in uncertain times

wonder if manufactures have the same attitude ?

 

[Brisel]

,,,,,, have to say I was disappointed that Brisel went out and brought his new binder without consulting all and sundry but hey ho

Sorry to deny you the God-knows-how-many-pages-of-prevarication! I read the God-know-how-many-pages, got a few on demo, got the quotes, looked at the dealer backup and made a choice...

 

[Feldspar]

It's a big risk for a dealer, a lot of money in uncertain times

wonder if manufactures have the same attitude ?

So what would you say the depreciation rate is on a 780 vs 770 and 10.90 vs 9.90? That's basically the question. No certain answer, but have to make a judgement.

 

[Clive]

Sorry to deny you the God-knows-how-many-pages-of-prevarication! I read the God-know-how-many-pages, got a few on demo, got the quotes, looked at the dealer backup and made a choice...

where is the fun in that ! we have a long winter to pass

 

[Daniel]

We've discussed that before in the very long old thread. This one is an attempt to ask, and hopefully shed some light on, a very specific question about depreciation rates. I no longer have the appetite for an 80 page thread. Want to cut to the chase here!

Well anyway if you do trade in that little Tucano for one huge combine, can I have first refusal on it?

 

[Two Tone]

It's more a question of this sort of maths:

Making up the numbers a bit to illustrate, say a 10.90 is £380k and a 9.90 is 350k. Expect the former to give 10% more output than the latter. To do the equivalent acreage of the 10.90, you'll need to cut for another hour a day to keep to time. That means combining at higher moisture. An hour at say 50 t/hr at say 19% means very roughly 50*5= 250 quid extra in drying costs. Multiply that over 20 days and you have extra season drying costs of £5k. Arguably you'll be paying everyone to be there for an extra hour (rather than just working faster [in reality fuller trailer loads] in the reduced hours with the bigger combine) with the smaller machine which could another few thousand. Say £7k overall.

Now consider different depreciation rates. £350k depreciating at 17% a year is going to gives you averaged annual depreciation over 5 years of £42k. Now assume a 10.90 depreciates at 20% and you have an annual average depreciation over 5 years of £51k. This gives a difference of £9k p.a. between the two and favours getting the smaller combine and working it harder.

Fiddle around with drying costs, the fact that you have less wiggle room with the smaller machine in a wet year to cut wetter, depreciation rates, purchase prices et cetera and you can make the decision go the other way.

Oh what a lovely problem to have!

IMO you should go for the bigger one and make life easier for everybody including yourself!
You'll only regret it if you don't.
Or you'll end up getting cross with everybody and cause bad feeling amongst your staff.

Just end up running the thing for a year or two longer if the depreciation is too high to flog it.

On a farm your size, what the heck are you debating such a piffling amount of difference for?
You can't take it with you and you'll be a long time dead!