John Deere makes a LOT of tractors and has been doing so for a LOT of years. If you tallied them up you would probably find between 700 and 800 different models over the last 100 years. That’s “more than you can shake a stick at” as my great-grandmother used to say. Just how many tractors can you shake a stick at? Today we’re going to look at 5 models of recent John Deere offerings in the category of Compact Tractors and how these compacts hold their value.
John Deere serves the compact tractor category with their Series 1 and 2 tractors. In recent years, Deere’s naming convention for tractors of this size dictates these as 1000 or 2000 Series models. The last two digits of the model number refer (roughly) to the horsepower of the machine. So, the John Deere 1025R is a 1 Series at approximately 25 HP and the 2032R is a 2 Series with 32 HP. Generally, the “R” in the model name implies more bells and whistles while the “E” might be considered as a base model. You can see this difference reflected in the new selling price of the “E” and “R” designations in the similarly-sized 1023E and 1025R. The “R” version of these 1 Series sells new for about $1,700 more than the “E”.
Enough alphabet… Let’s get to the numbers!
We’re using a data set from IronGuides Fall 2020 to compare values of the following 5 John Deere Compact Tractors, examining their new selling price to their value at 1 to 5 years of age. This data is a normalized average of models sold through dealer and auction channels reported across North America. The term, “normalized,” here means that adjustments were made to arrive at a base value of the tractor as typically equipped when sold new. For example, if a loader and backhoe were not part of the tractor as typically equipped when sold new, then those options are not included in the normalized average values.
Photos courtesy of Deere & Company and Deere.com
Before we look at depreciation let’s start by looking at the average new selling price of these models from 2015 to 2019. The 1023E and 1025R average new selling price did show some fluctuation from the 5-year average but never strayed more than 4.4% from the average. This variation was in 2018 on the JD 2025R where the average new selling price was $ 11,234 or 4.4% lower than the 5-year average of $ 11,751
Next, the chart below shows the average new selling price of John Deere’s 2 Series tractor models 2025R, 2032R, and 2038R. The largest of these, the 2038R was introduced in 2017 and this may explain the dip in the new selling price of the smaller 2032R. This drop-in price of the new 2032R’s may have helped Deere differentiate between the two. Without the price drop of the 2032R in 2017 the two models would have been within $800 of each other. Comparing the 1 Series to the 2 Series, the variation in new selling price over these 5 years is more consistent on a percentage basis. No model in the 2 Series exceeded a 3% variation from the average new selling price over the period compared to the 4.4% variation in the 1 Series above.
Now that we have a baseline, let’s look at the depreciation over a five-year span. If you own one of these, you may want to go get a bullet to bite. I’ll wait. Ok, ready?
Starting with the 1 Series, the first-year depreciation is the biggest hit – as you would expect. However, the fancier (read pricier) of the two doesn’t suffer a hit as big as that of the lesser model. The first-year depreciation is 2 percentage points better on the 1025R than the 1023E. This trend continues over the next 4 years of the machine’s life. Where, after 5 years, the 1025R held on to 7 more percentage points of its value when compared to its jealous sibling, the 1023E.
Features on models can vary year-to-year. As an example, in at least 1 year between 2015 and 2019, the 1025R has some nice enhancements over the 1023E. For example, commonly found on the 1025R and not on the 1023E are cruise control, tilt steering wheel, a convenient fender-mounted work light, 2 extra HP, and possibly best of all, a suspension seat to ease the pain of annual depreciation as you tool about your kingdom’s countryside.
You may be thinking, like I was, that the bigger and better the tractor the less the depreciation. But, this isn’t always the case. Looking into the larger Series 2 John Deere Compacts, the smaller 2025R wins the depreciation contest over a five-year term. This reflects only 42% depreciation compared to 45% of the larger 2032R. Because the 2038R, introduced in 2017, hasn’t had a chance to age beyond 3 years at the time of this writing, we can only forecast what that depreciation will be. If the trend plays out for the 2038R it might prove to be the depreciation winner in years 4 and 5. This may be a valid assumption since it was also the leader in the first 3 years, beating the other Series 2 models by one to two percentage points in 1 to 3 years of age. To help you read the chart, the shading is indicative of tractor size – the darker the bar, the larger the tractor.
For these 5 models of John Deere compact tractor, here are the top 3 findings from this tractor valuation analysis:
- Bigger isn’t always better when it comes to lower depreciation
As we saw in the Series 2 depreciation, the smallest series 2, JD 2025R depreciated less than the larger JD 2032R.
- Buy the 2-year-old
If you’re a cost-conscious buyer looking to minimize depreciation but want the latest and greatest your best bet may be to shop for the 2-year-old model after the 23% to 26% depreciation hit in year 1
- Options matter
These compact tractors have a broad set of optional equipment. Even the normalized models of “R” versus “E” show that the better-equipped “R” held more value than the “E”. In reality, if you are in-market for a used compact tractor you will find everything from enclosed cabs, snow blowers, mower decks, backhoes, end-loaders, and blades that will greatly affect asking prices. If you are a seller you will find that these options will command a higher market value on the machines that include them. This is somewhat different from the automotive sector where, after a few years, options have no effect on a used car’s value. If you are interested in the auto side of this issue, check it out here.
Note that when buying or selling, usage and options can have a substantial impact on the value of the model you may be considering. To go beyond these averages, use IronAppraiser which will adjust for hours and options to give you a more accurate appraisal value for buying or selling.
For reference, here are some current listings of these five models for sale today as seen on IronSearch.com.