Deere Reports on Q3: Used Inventory Backs Up, Sales Weak

A glut of used farm machinery in dealer inventories is harming an already weak market for tractors and farm equipment, according to a report from the Wall Street Journal.

The Journal reported that profits for Deere & Co. fell by 40% in the third quarter. While that was better than Deere anticipated for the quarter, the company nonetheless trimmed profit and sales forecasts.

Key to a turnaround in the new equipment market is moving used equipment, the story said.

About 80% of new equipment purchases are accompanied by the trade-in of older equipment that dealers then sell to other farmers. When the equipment market weakened, dealers were left with overstocked inventories of late-model used equipment. In response, the article said dealers began to turn down purchases of new machinery that involve equipment trade-ins.

“Our biggest problem with new equipment is all the used inventory,” Tom Sloan, chief executive of Sloan Implement Co., told the Journal.

Deere has been offering buyers of certified used tractors and combines in the U.S. and Canada free warranty coverage and performance-monitoring software as purchase incentives, a move that has reduced its used tractor inventory at its dealerships by about 10%. S