This week I'll be covering Commodity Classic in Phoenix (and yes I've had more than my fair share of trips to warm places this winter - and I'm not complaining) which includes a great trade show. As I did at the 2015 National Farm Machinery Show I expect to hear more about a trend that has been gaining more traction in the farm equipment industry - certified pre-owned equipment, which I'll call CPO.
The idea of CPO products isn't new, major car makers and aggressive dealers - like CarMax - offer these programs where a specific vehicle undergoes an extensive maintenance check and perhaps a minor refurbishment to raise the value of used inventory. However, it's relatively new for the farm equipment business and it's coming to a local dealer near you.
Agco is kicking off a major CPO program this year. John Deere started one last year with specific models and added late-model sprayers during the National Farm Machinery Show. Case IH is rolling out a program here this week. And Claas has an extensive program too.
CPO equipment on a dealer's lot may carry a price premium over non-CPO machines. For example, Agco's Eric Lescourret, who is part of that company's CPO initiative, says the premium will range from 2% to 3% over the price of non-certified machines. He adds, however, that the dealer will still have non-CPO machines on hand, offering customers a choice.
That price differential depends on just how much had to be done to the machine when it was traded in. Each company does a specific number of 'checks' on specific models. These "100-point" type checks are built around warranty data companies have on their equipment targeting potential issues with that trade in. And in most cases, CPO equipment comes with a warranty when you buy.
The key is that with CPO equipment you have some assurance that you really aren't following the old adage that buying used equipment is essentially buying another person's problems. Those should be eliminated. And there's an added benefit too.
A CPO program creates a consistent pool of high-quality equipment a customer can count on no matter where you find it. For example, if you identify that you want a specific model of tractor and your dealer doesn't have it, but another dealer does in a different region of the country, you have some assurance shipping that machine to your location won't be a letdown. The machine will have gone through the same inspection program that your dealer would use, which creates confidence in the CPO used inventory.
Next time you're at your local equipment dealer you might want to explore just what they're doing with CPO and make it a factor in your fleet management plan.