This is an excerpt from a story on selling used equipment from Rural Lifestyle Dealer's Spring 2016 issue. Go here to view the complete story.
David Stevenson of Stevenson Tractor, Chesapeake, Va., says the market for used equipment is good in his area. “Our used equipment market has been holding steady for the last 24-36 months. Tractors in the 25-50 horsepower range are in demand for commercial and other end users,” he says. Stevenson Tractor carries New Holland, Kubota, Bush Hog, Land Pride and Echo.
He says his inventory of used commercial equipment has increased about 15% in the last year, due to a good housing market. About 25-30% of his used equipment inventory comes through the service department in instances where a customer chooses to buy new instead of proceeding with a repair.
When taking in equipment on trade, Stevenson says he and the salesperson each come up with their price relying on their experience, by checking auction sites like Ritchie Brothers and used equipment publications, like Fastline.
He says that about 75% of the time, he and the salesperson have this discussion in person to reach a price. For trades of good, in-demand equipment, they talk by phone while the salesperson is on site to keep the sales discussion moving forward with the customer.
A major factor they consider is whether they can offer a high level of support to the next buyer. “We stress our local support. Most customers come to us for knowledge and if I steer them wrong, they won’t come back to me again. A high percentage of our used customers, probably 70%, come back to buy a new tractor from us,” Stevenson says.
He says they like to sell used equipment to customers that live within about 60 miles of the dealership. “It doesn’t do us any good if we don’t see them again. These are the type of tractor buyers that you try to establish a relationship with,” Stevenson says.
Stevenson says when considering used equipment, he’s found customers generally rank their concerns this way:
- Availability of financing
- Maintenance history
- What industry the equipment was used in
The dealership offers its own warranty for used New Holland or Kubota equipment that is less than 5 years old.
Demand is good among the rural lifestyle segment for used equipment. Dealers say there are ways to further increase revenues by setting guidelines about the equipment you’re willing to take in on trade and how long you’ll keep it in inventory.
“We’ve found that warranty is a big concern when customers are purchasing new, but doesn’t seem to be a big issue for those who are buying used equipment,” Stevenson says.
Selling New Ways
Stevenson says he limits the amount of used inventory he carries. “My used inventory is no more than 20% of my overall inventory. The number stays the same regardless of the economy,” he says.
He keeps the used inventory on the lot for about 90 days. The units are listed on the dealership’s website and customers can search the inventory by category of equipment, manufacturer, brand, price or model. If the unit isn’t sold in 90 days, he advertises it on Craigslist for 30 days. After 120 days, he sells to a wholesaler.
Stevenson sometimes partners with his customers by offering to sell their equipment through consignment. He says the approach has several benefits.
First, they can have inventory to display without investing in purchasing the equipment. Also, Stevenson says sometimes the customer has an unrealistic expectation for what the equipment is worth. This gives them a chance to test the market. “In most cases, we can then acquire the equipment for less when it doesn’t sell,” Stevenson says.