Six-figure sums are now the norm on tractor price lists, so how do you get the most for your money when buying horsepower? Jane Carley investigates.
As manufacturers face the costs of meeting ongoing emissions legislation and a trend towards the use of more powerful tractors for many farming businesses, tractor prices inevitably continue to rise. As such, getting value from the added investment required to purchase such tractors can be approached in a variety of ways.
Buying a high horsepower tractor using the manufacturer’s finance scheme and an extended warranty with service package is an increasingly popular route, suggests Jon Wareing, JCB sales manager at East Anglian dealer G. and J. Peck.
He says: “There is a trend to financing over a longer period as capital costs rise. Whereas tractors were costed over three years previously, a five-year agreement tied up with a five-year warranty is becoming more common.
"At the end of the term, the customer has a good quality tractor which will command a useful second-hand value.”
Depending on cashflow, the finance may be spread over longer, six or seven years, so while it will not be fully paid off, there is a good deal of equity in it, explains Mr Wareing.
“Farmers do not want to risk high repair bills, but this allows them to fix their costs without going down the leasing route. Although, some larger farming companies are moving to leasing agreements.”
Robert Pugh, general manager of Cheshire-based Fendt and Massey Ferguson dealer, R.V.W. Pugh, says extended warranties give customers peace of mind.
“Generally, the longer you keep a tractor, the more the risk of an expensive breakdown increases and customers do not want to risk this. Warranty cover is becoming more costly, but it is worth considering a longer term package if you want to keep a tractor for 8,000 hours,” he says.
Mr Wareing says one advantage of buying new is the support offered by the dealer and manufacturer.
“You can be confident they are going to back that tractor up, which may not be the case with an older machine, which gives peace of mind when timeliness is key.”
Recruitment and retention of staff is another factor, adds Mr Wareing.
He says: “A new tractor may be an important perk to your main operator and one that stops him going down the road to work for your neighbour.”
Machinery financing is always something to discuss with your accountant, he says, as there may be other options to consider. An example of this is a Pecks customer whose business is in transition and feels a 300hp tractor may be the right move, but does not want to commit to five years.
“We recommended a 12-month hire, which is an unusual move and incurs higher monthly costs than a five-year finance package, but fixes his costs and gives him the opportunity to return the tractor in a year’s time,” says Mr Wareing.
The ‘known quantity’ of a tractor which has been regularly serviced and under warranty for five years enables the dealer to offer a realistic trade-in, which helps the customer plan their next purchase, but with the escalating costs of high horsepower tractors, there are difficult choices for customers who struggle to make the leap to another new model.
Mr Wareing says: “Some may find it hard to justify a new tractor, yet they would not be in the market for a five year-old trade-in either. There is demand for a two-year-old tractor with the balance of the warranty, yet they are few and far between.
"Manufacturers are always keen to offer incentives and deals for new tractors, so the price difference between that two year-old tractor and the new equivalent may be small.”
Robert Pugh agrees that a high hour tractor will have less residual value, but adds there are other factors to consider.
He says: “When you come to sell, you will had the value out of it. Tyres are a significant cost now and, if purchasing a second-hand tractor, replacements could add £10,000 to the price.”
Mr Pugh reckons the allure of a new tractor will endure, however.
“While the passion for new is not as it was, I would still estimate that 75-80% of the tractors offered for trade-in do not need changing. A new tractor may not make that much difference to the business but it is still attractive.”
At Heaths of Stockton, Cheshire, a fleet of 10 tractors take on arable and dairy duties as well as working on the anaerobic digestion plant, and partner Simon Heath has seen horsepower grow in recent years.
He says: “We have added larger tractors to meet the demands of our machinery – power harrows are up to widths of eight metres. But we are looking to get more value from them.”
Mainly Fendt, the tractors are bought outright from R.V.W. Pugh and come with a flexible warranty and service contract.
Mr Heath says: “It is an advantage being able to add hours to the initial warranty term. We tend to keep tractors for three to five years. At 2,000 hours, the modern tractor is barely run in; while we have always run them for 6,000-8,000 hours, now it might be 10,000 hours.”
He adds that while it is nice to have a new tractor, he has no concerns about running a five-year-old machine with 8,000 hours on it as long as it has been kept under warranty.
“We have three Fendt 828s and when I get in them, it is hard to tell the difference between the older and newer models. It helps that the Fendt warranty is comprehensive, so even if it is a cosmetic item which needs replacing, it gets done.”
Mr Heath says that purchase prices for new tractors have increased steeply.
“While trade-in values for our tractors have kept up, it is another reason why it makes sense to keep them for longer. Our purchasing policy means that if we have a good year, a tractor that is due for renewal will get swapped, but if conditions are less favourable we will keep it in the fleet for another year.”
Contractors C. Groves and Son focus on straw and cereals work as well as their own farm near Sutton St James, Lincolnshire, and added a 335hp JCB Fastrac 8330 to the fleet for harvest 2019.
“Depreciation is a key concern for us,” explains partner Gordon Groves.
“We aim to pay two-thirds of the cost as a cash purchase and finance the rest on a three-year contract. That way the tractor is working for us, rather than to pay off the finance and we do not need to run it into the ground. We will keep it for 6,000-7,000 hours.”
Mr Groves had opted to keep his 2006 Fastrac 8250 as a backup, rather than trade it in.
“We do not put as many hours on a larger tractor as some would, but they have to do everything, from running a big square baler to potato carting and we have also used the 8330 for ploughing.”
A 5,000-hour, four-year warranty has been added this time, says Mr Groves.
“We have always found the Fastrac reliable, but via the warranty, a couple of software issues were quickly remedied.”
He adds the larger Fastracs also represent good value.
“When we compared them with other high horsepower brands, there was a significant price difference. We have also recently purchased a Fastrac 4220 and we were surprised at the small step up in cost to the larger tractor.”
The 220hp Fastrac 4220 also demonstrates Mr Groves’ eye for a good deal. Featuring a limited-edition silver finish, he aims to keep it in the fleet for a few years to take advantage of future demand for ‘collectable’ tractors.