Crushing the "Trade-in Evil" of 1928 - farm equipment industry

Crushing the “Trade-in Evil” of 1928

By Iron Solutions Posted in Resources | Tractor Blue Book

March 02, 2020

The history of Iron Solutions: Part 1 IronGuides® Rich History Goes Back Over 80 Years to the First “Trade-In Manual” Part One of a Three-Part Series The fierce competition between agriculture equipment manufacturers in rural America in the late 1890s is hard to imagine, as giants of the industry struggled for supremacy and sold new machines any way they could. Equipment dealers were caught up in the struggle as price cutting and high demand for modern ag equipment attracted “salespeople” from all trades, including blacksmiths and general merchants, who became equipment dealers. Farmers were buying the modern farm machines as fast as they could be produced. The equipment was sold to farmers by way of manufacturer to jobber, to dealer to farmer, according to the History of the North American Equipment Dealers Association, by Earl G. Becker.
“In many cases, agencies were placed with corner grocery men, liverymen and curb-stone dealers, men that had no ability as salesmen, and the only way they could sell goods was by making lower prices than the regular dealer,” wrote Becker.
In 1889, a Kansas City tractor dealer stated that machines were sold too low, and “there is no confidence…as to prices,” Becker wrote. Dealers recognized their problems, and during a session at the 1889 Minnesota State Fair, they gathered at the Merchants Hotel in St. Paul and formed the first dealer association, later named Northwest Implement Dealers Association. Three weeks later, 500 miles away, and entirely independent of each other, the Kansas Retail Implement Dealers Association was formed for the same reasons. “This is significant since it indicated the extent of the trade problems across the country,” wrote Becker. As the number of regional associations increased, the need for a national association became evident. In 1900, The National Federation of Implement & Vehicle Dealers Association was formed. The national organization helped address many of the dealers concerns, until the 1920s when dealers were faced with another issue: the “trade-in evil.” It was described in 1928 as one of the most serious menaces to the retail farm equipment business, stating it was “a menace that… lowers the dignity of our profession and should be discouraged in drastic terms,” Becker writes. Association dealer members discussed options to address the wild variation in trade-in prices by creating a tractor and combine trade-in manual. The first collaboration was in 1929 when a “sheet of tractor trade-ins values” was released to dealers in Indiana and published in the national trade press. The values were based on a questionnaire sent to all Indiana dealers to determine the average trade-in values for tractors and combines, with 300 dealers responding, covering 31 different tractor models. Manufacturers objected to the schedule being published outside of the state in which the survey was conducted, so that put a stop to the publication. Finally, in 1936, the National Federation approved publishing a trade-in manual with values based on the following: established list prices, less annual depreciation, on a percentage basis, according to Becker. The first book was published by the Federation in 1937. The initial printing of 2,257 copies of the Official Tractor & Combine Trade-In Manual sold out quickly, with a “rousing unanimous vote for continuation in 1938” calling it “one of the most constructive accomplishments of the Federation.” A piece of luggage Description automatically generated A close up of text on a white surface Description automatically generated The organization, now known as the Equipment Dealers Association (EDA), published the first tractor and combine trade manual in 1937 to determine trade-in prices. The information in the “Official Tractor and Combine Trade-In Manual” empowered dealers to trade used equipment confidently. The manual also helped dealers understand the market as new attachments like corn pickers, disc plows and balers emerged. The Official Tractor and Combine Trade-In Manual, published for and sold by the members of the National Retail Farm Equipment Association and its affiliated State and Regional Associations, became the trusted source for used ag equipment values. In the late 1950s, the Official Tractor and Farm Equipment Guide was still offered for sale to dealers by the associations, but extended the reach to “Retailers, Wholesalers, Manufacturers, Bankers, Tax Assessor and Finance Companies.” A close up of text on a white surface Description automatically generated A picture containing text Description automatically generated A close up of a sign Description automatically generated The “Official Tractor and Farm Equipment Manual/Guide” continued to help the industry through the 1950s and 1960s to the boom time of the 1970s and the downturn of the 1980s. The information in the guides allowed dealers to trade used ag equipment confidently, which enabled them to buy new ag equipment from manufacturers. It gave lenders enough data to comfortably issue loans to farmers, who then had the cash to buy new tractors and combines. The association name changed to National Farm & Power Equipment Dealers Association in the 1980s, and the manual was named “Official Guide: Tractors and Farm Equipment.” The State, Regional and Provincial Associations affiliated with the North American Equipment Dealers Association continued to compile and sell the guides until 1994 when the last “Official Guide: Tractors and Farm Equipment” was published. In that same year, the first Midwest region Official Guide was published as a test pilot. A close up of a sign Description automatically generated A picture containing green, sign, book Description automatically generated The first Midwest regional Guides2000 (pictured left) was released as a pilot test in Spring 1994, which was also the last year the original guide (pictured right) was published. The following year, NAEDA was publishing five regional books across the US, with Central Communications Corp (CCC) publishing the two Canadian editions, now named the Official Guides2000. In 1995, the organization (now named North America Equipment Dealers Association – NAEDA) published five regional books across the United States with partner Central Communications Corp (CCC) publishing the two Canadian editions. The new guides were named the Official Guides2000. Then, in 1999, the groups merged to form the new company IRON Solutions, LLC, owned equally in thirds by NAEDA; the 19 regional dealer associations and Merlyn Friesen, CCC company owner. Although the farm equipment industry has gone through many changes in the past 80 years, the gold standard for gathering and normalizing the sold transaction data is still IronGuides®, whose roots started in 1937 when dealers just wanted to estimate the usual fair trade-in values for tractors and combines. Today, because of the increasing complexity of available options and configurations on tractors, combines and other farm machinery, the dataset has exceeded the capacity of the book binding. It is estimated that if all of the data available in the online version of IronGuides were printed in a book format, the book would be over 3,500 pages or roughly five times the size of the final print edition in 2017. Iron Solutions, Inc, established in 2008, today publishes IronGuides® in an online version, the Outdoor Power Equipment Official Guide, the Serial Number Handbook and other valuation resources serving ag and outdoor power professionals. They also offer IronAppraiserTM for single online appraisals for the farmer. A blue and white sign Description automatically generated Iron Solutions, Inc’s IronGuides®, Winter 2017, was the final print edition. IronGuides online, still considered the gold standard in equipment pricing, offers online agriculture values, with more options and attachments. Sources: The Story of the North American Equipment Dealers Association, 1991, by Earl G. Becker Coming up: Part II Making the Trade: One Farm Equipment Dealer’s Dilemma Part Two of a Three-Part Series Establishing accurate trade-in values on used farm equipment may seem like a challenge for dealers today. It certainly was a challenge for a single-store John Deere dealer in Outlook, Canada back in the 1980s. In his initial pursuit to give his customers a fair trade-in price for their used farm equipment, Merlyn Friesen had no intention of establishing a valuation method that is still used today to create IronGuides®. “In the 1960s and 1970s, farm machines were basic with few options, but in the 1980s and 1990s ordering and trading tractors and all equipment became more complex,” said Friesen. “We would give a farmer a quote on his trade-in, which was our best guess, and if the difference was lower than the neighboring dealer, we were a hero. If the difference was higher, we were the bad guy. Neither were right…we just didn’t know. In the meantime, everyone was losing on trade-ins, including the farmer.”

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