The data reveals a noticeable decline in transaction prices for agricultural equipment beginning in Q3 of 2024, a trend that has been observed across both U.S. and Canadian markets. This article aims to explore several potential factors driving this downward shift and what the data may be telling us about broader market behavior. For Canadian dealers, this shift presents a unique set of challenges, but also opportunities to adapt sales and inventory strategies strategically.
One of the most immediate and common reactions when dealers struggle to move inventory is to reduce prices in an effort to stimulate demand. This is reflected in the data through two key metrics: the dealer’s advertised price and the cash transaction value, as well as the percentage difference between them. Tracking these trendlines over time helps us understand how aggressive dealers are becoming with discounting to close sales.
While both advertised and cash values are trending downward, it’s important to ask: are these trends being driven by the same underlying factors in both markets?
One notable insight from the data is that U.S. dealers appeared to experience over-inventory conditions earlier than their Canadian counterparts. This earlier saturation likely triggered the earlier decline in U.S. values. However, the continued decline across both markets may now be influenced by broader macroeconomic conditions.
Feedback from dealers suggests that economic uncertainty—driven by inflation, fluctuating interest rates, and global instability—has created a “wait and see” attitude among equipment buyers. A farmer told me one time, “When I don’t know, I don’t do.” That mindset appears to be widespread right now, and it’s contributing to slowed decision-making and added strain on inventory movement across the U.S. and Canada. According to FCC Economics “Dealers are great at being proactive and are encouraged to continue engaging with customers on equipment replacement and service maintenance decisions, addressing both short-term needs and long-term goals” stated Leigh Anderson, Sr. Economist.
In summary, while initial pricing declines may have been driven by inventory surpluses—especially in the U.S.—ongoing softness in equipment values appears to be fueled by larger economic concerns. Anderson indicated “the ongoing trade uncertainty has disrupted equipment purchasing decisions, as concerns over rising costs and farm revenue have made customers more cautious.” However, greater clarity around trade disruptions will help stabilize equipment price expectations and support more confident investment in new equipment. As the market continues to react to both supply conditions, and buyer sentiment, close monitoring of these pricing trendlines will be essential for dealers and manufacturers alike.
Written by: Jon Wommack, Iron Solutions Product Manager and Leigh Anderson, Farm Credit Canada Article written in partnership with FCC Economics.