|
Cadiz Kentucky | Take it for what it’s worth from my perspective.
A lot of the items I suspect are from maturing leases. If you have a three or four year lease on most anything and if you recall we have had roughly 20-25% in price increases in the last 36 months on new machinery. The expiring lease purchase option was established in 2018,2019 and 2020 before we were seeing any price increase. For example a row crop tractor will have a 60-70% 600-900 hr lease purchase option (which is based of MDP “invoice cost the dealer paid”. Now those expiring leases have equipment that the real market values are 40% more than the purchase option. If you exercise the purchase option then sell the tractor you will basically get paid plus a bonus for using the tractor for the previous 3-4 years for free. Never seen it happen before.
The only catch is if you sell it and capture all that equity is what is the operating cost of the replacement unit if you need it! The other catch to leasing companies and I expect it to surface as they will lower the purchase option % so they do not get caught upside down when things eventually turn. The industry is on a huge cliff in equipment cost, demand and resale value. A crystal ball on sustained inflation and money cost would be worth more than a fortune. As it always has been and always will be, as I suppose that is the definition of opportunity/risk!
Just what I am seeing happening. Regards, Joe | |
|
Late model equipment for sale?
