Repair costs and equipment values
Condition is a huge reason that values of equipment are more than the year, make, model and options. The cost to make a piece of equipment ready for use can cause a huge swing in the value of the equipment. Listen to Bill Albaugh explain why repair costs matter when establishing values for used equipment trade-ins.
Repair cost in evaluations — and this makes no difference if it's agricultural equipment or construction equipment — is a big influencer. When we talk about repair costs, you're talking about bringing a piece of equipment into a shop and paying $80, $90, $100, $110 or $120 bucks an hour for labor rate plus parts to get things reconditioned. For combines and forage choppers specifically, you know, you could have a $20,000, $30,000, $40,000, $50,000 bill on a piece of equipment once you bring it in to your yards. You know, even in an auction sitting where you're disposing of an asset, the prospective buyer may have those types of costs once he buys that piece of equipment. And tires are another thing. I mean, you could have a cost of $5,000 to $30,000 of repair costs on tires. Taking a tractor in to a service department at your local dealership, or even a dozer or an excavator — it doesn't matter what piece of equipment — just to get an oil change, can be anywhere from $1,000 to $2,500. On a planter or grain drill, you might have openers and, any more, those planters are 24-plus-rows wide so you've got disc openers. So you've got reconfiguring and reconditioning cost of each row unit which can be thousands of dollars, as well as on on a grain drill or even an air drill, the disc openers, type of a thing — you got thousands of dollars of repairs that can go into effect if those components are all worn out. So repair costs have a huge influence on the valuation of a piece of equipment.
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