“Watch out for that first step. It’s a doozy!”
I’m not sure where that phrase was first applied but it is certainly applicable when we talk about outdoor power equipment’s annual depreciation. We all know the depreciation hit is worst in the first year. This is true of anything with wheels including Zero-Turn Mowers.Iron Solutions has a deep dataset of OPE equipment transaction reports. They form the basis for their IronGuides® product. A dive into the Spring 2019 Outdoor Power Equipment Guide dataset for 2014 to 2018 models of zero-turn mowers reveals over 300 models from 14 manufacturers. Overall, for this category, the average first year depreciation is 31%. After this first-year drop the depreciation continues at an annual rate less likely to induce vertigo — in the 6% to 4% range.
The general curve or “hockey stick” shape we see here is typical when looking at any category of OPE or ag equipment. It gets more interesting when we dig deeper to discover differences between the manufacturers.
First I limited the set of models to the larger horsepower ZTR’s with an average new selling price of $9,000 or more. These are generally commercial grade mowers with more horsepower. Limiting to the higher side of the new selling price generally should filter out most manufacturers’ models of residential ZTR’s for those that offer them. Next, I set aside only the 2018 models to look deeper into the first-year depreciation. When looking by manufacturer and sorted by the average first year depreciation, you can see how these manufacturers fared against the average (31%) first year depreciation across the entire ZTR category.
See any surprises? Probably. But be careful before you jump to any conclusions about resale value of any of the manufacturers in the list here. There are a field of factors to consider that don’t necessarily come to light when looking at these averages. Consider that each of these manufacturers, their models, and their dealers has a mix of features, warranties, incentives, leasing options and other factors that can influence their first year depreciation. And someone generalizing a category like commercial zero turn radius mowers by manufacturer can miss important distinctions deeper in the data… or in the news.
If you follow the OPE news many of you will remember that Jacobsen acquired Dixie Chopper in February of 2014 and more recently the parent company closed the Dixie Chopper manufacturing plants in November of 2018. These changes seemed to have had an impact on depreciation and might explain why these two makes are at the bottom of this list.
Aside from these acquisitions and corporate mutations that impact retained value, differences from model to model are also evident. To see what I mean, let’s dig one layer deeper into the Exmark line for distinctions that are possible between models. Of Exmark’s 2018 models there are eighteen model or model variants with an average new selling price greater than $9,000. As you can see in the chart above, the average first year depreciation of all eighteen Exmark models is 30% on its first year depreciation. That’s a respectable, better-than-average figure. But the range between the models is a high of 32% of the diesel Exmark LZ 88CDYM and a low of 26% for the less expensive LZX 801KA. That is a 6 percentage point swing among these models.
So, what explains this 6% swing between models from the same manufacturer? It could be that the larger Lazer Z S-Series, LZS88CDYM, gets more typical usage hours than the smaller Lazer Z X-Series, LZX801KA. Or perhaps the market respects Exmark’s claim of the Lazer X-Series as its “top-of-the-line” and the X-Series retains more value because of it. It could be a combination of these and a range of other factors.
The difference in depreciation rates between Zero-Turn Mower models isn’t unique to Exmark. Similar patterns exist between models for the other manufacturers too.
The best way to narrow depreciation, retained value and current market value for a particular model is to appraise it specifically. Iron Solutions has tools that go beyond averages like these and lets you assess the value of a specific model and consider the impact a particular mower’s usage hours and, in most cases, specific options. Check out the value of your zero-turn mower or other outdoor power equipment with IronAppraiser® using single online appraisals ($19.95 each), the Outdoor Power Equipment Official Guide Book, or a digital subscription to IronGuides®.