Farm and Garden Machinery Wholesalers NAICS 423820

May 6, 2025 - Farmers Facing High Replacement Costs

• The high cost of new farm equipment is leading many growers to shift their replacement strategies, with some opting to extend the lifespan of their current machines, while others are investing in late-model, low-hour used equipment through auction or dealer channels, Farm Equipment reports. Leasing activity also began increasing in the second half of 2024 as producers began exploring methods to reduce equipment costs. With farm incomes projected to be lower this year and prices for new machinery high, strong demand for used equipment is expected to persist. “Producers may take a wait-and-see approach in the first half of 2025, potentially delaying equipment upgrades as the spring planting season approaches,” Lucas Scheibe, an AgDirect territory manager in North Dakota told FE, adding “However, if policy and tax conditions remain favorable, improved commodity prices could bolster farm income and influence buying decisions."
• The US agricultural equipment market is experiencing a significant downturn in sales this year with tractor and combine sales falling sharply compared to 2024, according to new data from the Association of Equipment Manufacturers (AEM). Sales of farm tractors and combines declined by double digits in March, with total farm tractor sales down 13.6% year over year and 15.1% year to date. Sales of four-wheel drive farm tractors declined 19.7% YoY in March, from 376 to 302, while total sales of two-wheel drive farm tractors fell 13.5% YoY from 18,348 to 15,878, per AEM. Sales of self-propelled farm combines tumbled 37.7% over the same period and were down 56.5% year to date. This year’s downward trend in ag equipment sales extends the decline that persisted throughout 2024, reflecting global trade concerns, tariffs, and the lack of assurance that a farm bill provides.

• The Trump administration’s 25% import tariff on steel and aluminum – key inputs in farm machinery – threaten to push already high prices for farm machinery even higher, as manufacturers seek to recoup higher input costs by raising prices. Historical data from the 2018 trade war shows that similar tariffs led to a 78% increase in domestic equipment production costs, according to the Association of Equipment Manufacturers. Such cost increases could affect manufacturers and farmers alike, with farmers already facing significant financial pressures. Over the last three decades, the price of 200-hp tractors has risen by 287%, far outpacing inflation, while 300-hp tractors have seen a 275% increase. Trump’s metals tariffs imposed in March – along with other tariffs – could present new financial challenges for the agriculture industry, including depressing sales for farm machinery wholesalers as stressed farmers delay or forego new equipment purchases.
• Dealers of large agricultural equipment are facing elevated risks due to low commodity prices and the current tough economic climate facing farmers, the North American Equipment Dealers Association (NAEDA) warns. In January, NAEDA reported an uptick in customer delinquencies and a corresponding increase in issues with customers' trade-ins. Beyond the obvious blunder of overpaying for a trade-in, dealers need to be aware of the legal risk associated with liens on trade-ins. Any liens a bank has on such equipment remain attached to the trade-in after the dealer takes title. If the bank comes after the dealer for the amount of the lien, the business gets hit twice – first, by giving the customer credit for the trade-in value by reducing the purchase price for new equipment and second, by turning over the trade-in to the bank (or paying the bank cash of approximately the same amount), according to NAEDA.