Machinery Costs

[Clive]

Ok then u must at least agree the finance on a fendt has gone up more than other makes with the larger capital requirement after these rate increases? Without throwing about extreme examples lets just simply keep to tractor replacement policy

The only reason i brought this up is because i remembered you saying a few years back the cost of money was so cheap that it wasnt a factor, im just wondering if youd changed your view?

of course - finance becomes a bigger % of overall ownership cost the higher the value of the item being costed

as i keep saying though i have no brand loyalty and make my purchase decisions based on overall owner cost NOT just capital cost. The last fendt we owned / sold had a very reasonable cost of ownership as i’ve detailed in posts here before

are fendts more than other brands now ? last 2 times i’ve bought a tractor the price was very similar to a similar spec JD

as always, i will look at the numbers and in combination with reliability, dealer and operator wants make the best decision at the time

 

[daveydiesel1]

of course - finance becomes a bigger % of overall ownership cost the higher the value of the item being costed

as i keep saying though i have no brand loyalty and make my purchase decisions based on overall owner cost NOT just capital cost. The last fendt we owned / sold had a very reasonable cost of ownership as i’ve detailed in posts here before

are fendts more than other brands now ? last 2 times i’ve bought a tractor the price was very similar to a similar spec JD

as always, i will look at the numbers and in combination with reliability, dealer and operator wants make the best decision at the time

Im not questioning your policy and tbh im a fan of the fendts, BUT how can you make decisions based on total cost of ownership when no1 could possibly know the total cost of ownership until the tractor has done the hours and has been changed because you could hit it lucky or the transmission could go bang just before the salesman arrives in the yard to look at your trade in, unlikely but you get my point,

 

[Clive]

Im not questioning your policy and tbh im a fan of the fendts, BUT how can you make decisions based on total cost of ownership when no1 could possibly know the total cost of ownership until the tractor has done the hours and has been changed because you could hit it lucky or the transmission could go bang just before the salesman arrives in the yard to look at your trade in, unlikely but you get my point,

the is no certainty with any make

you can only budget based on best estimate and previous history / experience can’t you


if you want certainty then contract hire ……. but that certainly and others taking risk for you usually has a significant cost

 

[daveydiesel1]

the is no certainty with any make

you can only budget based on best estimate and previous history / experience can’t you


if you want certainty then contract hire ……. but that certainly and others taking risk for you usually has a significant cost

If needin the tractors mostly for seeding and harvest would the hire not be more cost effective as only hire for couple or 3 months at the time

 

[Johnnyboxer]

the is no certainty with any make

you can only budget based on best estimate and previous history / experience can’t you


if you want certainty then contract hire ……. but that certainly and others taking risk for you usually has a significant cost

It surprises me that more of the larger farmers and/or contractors , working machines harder & longer don’t utilise contract hire for a fully costed machine

 

[Martin Holden]

I know quite a few people in the machinery trade and things aren’t as good as you might believe. Lots of overinflated used stock sat in yards they can’t sell and new sales numbers are about 25% down so far this year compared to last. I know one dealer who in 50 years has never had any borrowed money. Everything in his yard has always been bought and paid for. He’s gone and got a substantial loan recently which speaks volumes to me. Reason being he was gently pushed into building a fancy new showroom by his main supplier and the build has doubled the budget.
I do know one guy who’s is making money because he’s hardly got any stock. Somebody asks him for something and he then goes and finds it adding on a finders fee. He runs this along side his repair business where he has 7 full time fitters and he’s doing very well.
Same in the car trade as well as things have really slowed down for them. Two I know have said this weekend used car prices have dropped 15% since January this year.
I know a tiler who’s just been laid off a 5000 house build project. The developer has decided to shelve it until next year.
Interest rate rises are grinding the country to a halt.

Indeed. Interest rates are a blunt tool for controlling inflation. They have the opposite effect initially that’s the problem

 

[Bossfarmer]

of course - finance becomes a bigger % of overall ownership cost the higher the value of the item being costed

as i keep saying though i have no brand loyalty and make my purchase decisions based on overall owner cost NOT just capital cost. The last fendt we owned / sold had a very reasonable cost of ownership as i’ve detailed in posts here before

are fendts more than other brands now ? last 2 times i’ve bought a tractor the price was very similar to a similar spec JD

as always, i will look at the numbers and in combination with reliability, dealer and operator wants make the best decision at the time

most tractors have reasonable cost of ownership using your depreciation calculation method i.e allowing machinery inflation to inflate your 2nd hand value but not accounting for it, if you dont want to do the cost to change calculation at the very least you should adjust the prices for inflation in your calculations and see what its really lost, yes fendts are more than other brands you seem to only quote JD which is again a premium price tag, case, nh etc(theres a long list) are significantly cheaper

 

[oil barron]

maybe in capital appreciation terms but no way in dividend return. ……… and you could have accessed that same capital return just by buying land, no need to actually farm it

unless you’re planning on selling your farm you can’t live off capital appreciation

The alternatives to get 15-20% would be the same. No stock or business going to pay that out every year.

 

[Enry]

It surprises me that more of the larger farmers and/or contractors , working machines harder & longer don’t utilise contract hire for a fully costed machine

Some do, but it's like extended warranty etc, you decide whether you want the risk or pay someone else to take that risk. A tractor taken on contract hire say 3 years ago and returned now would be an outright winner for the provider with inflation in new price and way above budgeted value for selling it on. It is a good way of locking in cost, but they look at new value, expected residual, interest rates etc and build in a margin. Any damage etc can be expensive, probably a lot more than if it was owned and traded in as is. Horses for courses - depends on attitude to risk - contract hire is great for risk averse, not for those who abuse kit and would rather take a gamble

 

[suffolksmallholder]

What is wrong with that car, there are loads for sale on ebay with very low miles, similar age (some for considerably less than £21k).

They are a fashion item. Horrible niggles with the electrics and poorly built at Cowley. The home of carp quality.
Daughter had a brand new one and got rid in three years for an electric Pug after an endless list of issues.
They are great fun to drive and with the window pillars further back make roundabouts safer as you can see without rocking back & forth
SS

 

[Hooby Farmer]

I farm on such a scale, that if I had to replace a piece of machinery I would probably find it a heavy enough burden right now....and I'm talking about well used equipment not new.

 

[Clive]

If needin the tractors mostly for seeding and harvest would the hire not be more cost effective as only hire for couple or 3 months at the time

we used to hire everything with a engine ( i have no interest in owning depreciating assets unless I have to !) it was the cheapest way to get use of machines we needed for a number of years but in about 2013ish that seemed to change and its been cheaper to buy and own tractors since then

 

[Clive]

The alternatives to get 15-20% would be the same. No stock or business going to pay that out every year.

Commercial property certainly has, plenty of none ag business look for at least a 20% ROI

 

[Clive]

most tractors have reasonable cost of ownership using your depreciation calculation method i.e allowing machinery inflation to inflate your 2nd hand value but not accounting for it, if you dont want to do the cost to change calculation at the very least you should adjust the prices for inflation in your calculations and see what its really lost, yes fendts are more than other brands you seem to only quote JD which is again a premium price tag, case, nh etc(theres a long list) are significantly cheaper

not getting into that discussion again !

The true cost is what it HAS cost (past tense) you and only truly quantifiable the day you sell .......... the tax man agrees

 

[Clive]

It surprises me that more of the larger farmers and/or contractors , working machines harder & longer don’t utilise contract hire for a fully costed machine

we used to CH everything - it WAS cheap, it no longer is however so circa 2013 we started buying / owning again as things came due for replacement

glad I did given inflation since !

 

[farmerm]

As long as farmers would rather buy a £100k tractor than pay a £20k tax bill, why would manufacturers charge less. How much genuine good has a little bit of £300 wheat actually done farmers?

None when it dropped to £160 and is still in the shed....

 

[Bossfarmer]

not getting into that discussion again !

The true cost is what it HAS cost (past tense) you and only truly quantifiable the day you sell .......... the tax man agrees

im just saying your calculations are flawed as you dont take inflation into account i.e 160k today is the same value as 130k 5 years ago using the inflation calculator....

if you bought a fendt for 130k in 2018 and sold today for 100k it hasnt lost 30k it has lost 60k because the initial 130k is now worth 160k in monetary value, there is no way round this but to kid yourself

 

[warksfarmer]

im just saying your calculations are flawed as you dont take inflation into account i.e 160k today is the same value as 130k 5 years ago using the inflation calculator....

if you bought a fendt for 130k in 2018 and sold today for 100k it hasnt lost 30k it has lost 60k because the initial 130k is now worth 160k in monetary value, there is no way round this but to kid yourself

No it hasn’t. It’s lost £30,000 which is in black and white. You then get the true depreciation figure for that machine.

Then you go and buy the replacement at £160,000 and start again as a completely separate transaction.

 

[Clive]

im just saying your calculations are flawed as you dont take inflation into account i.e 160k today is the same value as 130k 5 years ago using the inflation calculator....

if you bought a fendt for 130k in 2018 and sold today for 100k it hasnt lost 30k it has lost 60k because the initial 130k is now worth 160k in monetary value, there is no way round this but to kid yourself

we have done this many times, what I may or may not do in the future has no effect of what something HAS cost in the past. If I trade a Porsche turbo bought for 200K in against a VW Golf for 30k and the VW dealer gives me a 100k cheque did I make 70k on the Porsche . ............ i'm pretty sure the fact is the Porsche cost 100k in depreciation

ask HMRC or any accountant how they cost depreciation ............ don't take my word for it

 

[Clive]

No it hasn’t. It’s lost £30,000 which is in black and white. You then get the true depreciation figure for that machine.

Then you go and buy the replacement at £160,000 and start again as a completely separate transaction.

he will never get this ................ lost count of how many times I've explained

Such logic is a tractor sales mans dream ! ....... look sir we can px your Fendt agains this here Massey at such amazing low cost to change, your Fendt has been almost free to own so get out now while the going is good


.........and the spiral of doom decline of an industry as the ££'s get sucked out continues without some even realising it