November 13, 2024 • 39 mins
In this conversation, Andy Campbell and Don Aberle discuss the current challenges and opportunities facing Titan Machinery as they navigate the agricultural equipment market. They explore the importance of customer loyalty, the impact of pricing and inventory management, and the role of data in making informed decisions.
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Episode Transcript
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(00:05):
Beyond the Hood, stories and strategies to fuel dealer growth.
Welcome everyone to another episode of Beyond the Hood with Tractor Zoom.
I'm your host, Andy Campbell, and our guest today needs no introduction in the world ofused farm equipment.
In fact, I just got to spend the last couple of days with him down in Nashville at theMoving Iron Summit.
(00:30):
And this gentleman not only can teach you a ton about how to manage used farm equipment, Ihe helps manage one of the largest dealerships in the world, but his
take on life will leave you with a smile, to put it simply.
There's a great philosophical conversation that he and I have, as well as getting into thetechnicals of what he sees in the market and where he thinks this market might be going in
(00:56):
2025.
So without wasting any more time, I wanna introduce to you Don Oberle of Titan Machinery,the senior manager of used equipment and sales.
Let's begin that conversation right now.
Don Oberle from Titan Machinery.
I'm the equipment guy here.
I've been with Titan for about 23 years.
(01:17):
I have always gravitated towards the used equipment side of it.
I do bathrooms on Tuesdays and Thursdays, if you need any...
Multifaceted.
...any janitorial work, you let me know.
But I just, it's...
I've always been around used equipment.
(01:38):
Maybe that's why I gravitated into this role.
We also do lead up to team for inside sales here at the company.
But again, most everything I do is about used equipment.
Okay.
Well, then this next question should be right up your alley about challenges that we'refacing right now at the end of 24.
(02:02):
Could be inside sales question as well, but what are some of the biggest challenges thatyou at Titan are facing as we...
get to like a month, two months away from the end of 2024?
I think like most dealership, the challenges we all face in these down cycles is dealingwith the pricing.
(02:22):
You know, what we bought that unit for, whatever value we might've given six months ago,12 months ago.
And that's probably the biggest thing is a lot of the values on the machines were given awhile back when that deal was done, right?
But because of the manufactured delays and deliveries, you know, during COVID and thentrying to get out of that.
(02:48):
Some of those values from what we all know this year ago, six months ago are completelywrong.
So I'd say one of the biggest challenges that dealerships face and even us, although we dohave a pretty consistent pricing review process.
to try to keep up with the downturn.
(03:12):
But one of the challenges is that value or what you wrote a check for that unit or whenyou made that deal, right?
You might have told that farm $100,000 and now that unit's worth 90.
As a dealership though, you're not about to go back out to that customer and tell them 90,right?
You're gonna honor your deal.
(03:32):
I think we've recently seen a TikTok thing that I would recommend.
not do it math.
Dealerships are the, you know, when it comes to farming, those communities, thatdealership is like the coffee shop, right, for the farmers?
Your trusted partner, your word means everything, and regardless of the situation, youkeep your word.
(04:02):
I know that question was about challenges, it is just one of those things.
That challenge is you told them it was worth $100, now it's only worth $90, but you'rewriting a check, the equipment showed up, and now you're doing the financing part of it.
Now checks or money's exchanging hands.
And you lost $10,000, right?
A smaller dealership, it hurts just as bad as a big dealership because the big dealershiphas maybe more deals, right?
(04:27):
Right.
But it's all relative.
It still hurts.
Right.
Yeah.
that's one of the challenges is knowing that you're honoring that deal, knowing thatyou're keeping that word when the new unit shows up, knowing that you're already behind
the eight ball.
Yeah.
And I see how that's tough for dealerships.
(04:49):
And as a farmer, though, I can also appreciate how important that is for the continuity ofrunning your operation, because we've been down three times this year with combine issues.
and having that trust of, if it does go down, can you call somebody?
Can you get parts?
Even if you have to drive a little further to get the part, can it arrive?
(05:10):
Because if you don't have that assurance that you can keep on running, it's harder to evenfathom how you get a crop in.
We go back to loyalty or farmers still loyal.
Farmers, I believe, by and are loyal to that dealership.
(05:31):
to that dealership that's going to come out and service you at 10 o'clock at night or Ican call 24-7 since when does a farmer work 8 to 5, right?
That's as I've been here.
That dealership trust and that relationship with the farmer is absolutely critical.
In all my years at Tide Machinery, has always been Dave Meyer as our CEO, PeterChristensen used to back in the day, but Dave Meyer mainly.
(05:59):
Now BJ Knudsen, mean, there's just, from the very top, the number one thing is thatcustomer.
And I believe that in a lot of dealerships, that number one thing is the customer.
And this might then lead into the second question I wanted to ask you.
So I might even ask you for two of the positives that you're looking forward to, thatyou've either seen this year or you're looking forward to next year.
(06:22):
And let's just assume one is customer loyalty, because I do agree with you that it'ssomething that can carry people through some load times.
But are there any other positives that you're seeing?
Back to load times, it goes both ways.
Dealerships, you know, that loyalty from the customer back to the dealership, the loyaltyfrom the dealership to the customer, it helps out both of us in the load time.
(06:47):
The positives?
positives is we've been through this before.
Every dealership has been through it before.
As long as you stay consistent, right?
If you've implemented processes, what I'm excited about is tight machinery through themany, many years and a lot of great leaders before us.
(07:11):
I mean, there's just processes that we have in place that will help us get through thistime.
will have an impact on our margins?
Sure it will.
Will it have an impact on our cash flow?
Sure it will.
But there's no...
The positive is that there's minimal concern because of those processes that are in placethat you have to have in place or you should have in place.
(07:38):
Because these...
positives.
So I just got to bring back up.
So 14, 15, 16, 17, right?
We all went through it?
And the positives for us.
is the willingness to change, the willingness to put new ideas into place.
(08:06):
And that has occurred.
So the positive for me at Tite Machinery is that there's concern, but very limited concernfrom the standpoint of how we will come through it because of the processes and the things
we've learned from before.
(08:27):
From the customer point of view, think the positive is that
They might not be buying equipment from us, but there's dealerships with green, red,whatever.
So now they're not going to buy equipment because they might not have the income, right?
They might spend a few more dollars on parts and service, but they have their localdealerships that loyalty to their local dealership.
(08:54):
They're going to get the service to repair their machines.
positive is that we don't necessarily have the parts challenges that we had over the...
previous few years in terms of supply of getting parts in a timely manner.
So I'd say positive customer size, have local dealerships of fixing machines.
(09:16):
Positive for the dealerships that made changes a few years back is that this downturn isnot going to be so concerning.
And I like how you put that too with the willingness to adopt the processes or hopefullyhave them in place if you don't.
And we've seen the same thing from progressive dealers that saying, okay, now is the timeto really get our stuff together, streamline and buckle down if we haven't yet or
(09:42):
implement those processes.
And you start to see that mindset, the benefit of the mindset in certain dealers that say,okay, this is the time for us to get better, kind of the iron sharpens iron.
It's better if we have a weekly meeting called Be Better.
I mean, it's not a bad thing.
It's just be better than yesterday.
Be better than last week.
(10:03):
It's a mindset that has come from the top down about being better.
So I got to ask you.
So you're a farmer, right?
Yep.
With a side job called the tractor's.
Right.
I'm not sure which one becomes the side job, which one occupies more.
But you've been involved in buying and selling or buying and trading your equipment foryears, right?
(10:32):
So that salesman's coming out and trying to do a deal with you and he's giving you a bootnumber and you're asking how much you're giving for my unit, right?
You've been part of this?
You as a customer, what has changed from how they used to do it to how they're doing itnow?
(10:53):
Is there a change?
Yeah, how the dealership is approaching it?
How that salesman is giving you a value and or
Structuring the deal.
How has it changed from 10 years ago to what it is now?
I'd say not all Experiences have changed some salesmen some dealerships have changed onthe approach some are more traditional still of like here It is take a leave it especially
(11:18):
last few years.
It was certainly a take or leave it You know, there's another buyer stacked up behind itthe Now though, I think especially now especially this year you can see it behind the
scenes of
trying to move the chess pieces before they arrive on a dealer's lots.
(11:38):
So a lot more of, you know, kind of like house, like this sale is contingent on anotherfarmer who is going to hopefully accept a piece of machinery and, you know, which is
largely due to the higher interest rates, I'm assuming, and the unwillingness to take thatextra holding cost on.
And so we see a lot more of those kind of contingent type of deals.
(11:59):
The one thing that I'm starting to see a little bit more of now,
is the presentation of data.
Before it was, there wasn't the transparency within the marketplace of I know whateverything's sold for and the farmer knows almost now more than maybe what a dealer is of
what all the local sales are.
And I'd say what I'm starting to see on the farmer side of it is that realization andacknowledgement that, yeah, the farmer has just as good of data and transparent to the
(12:30):
market is what I do.
I always joke about the insanity.
We all know the definition of insanity, doing the same thing over and over again andexpecting different results, But it's just, as you talk about data, there's so much data,
both for the farmer and for the dealership.
(12:53):
But to go out and, at the end of the day, a dealership is buying your equipment.
$500,000 piece and they're telling you $100,000 to boot.
Well, the farmer, the dealership paid the $500,000 for the new one, Paid $400,000 for yourused piece.
I'm only getting $100,000 out of you.
(13:14):
That's like gosh darn cash outlay, right?
Right.
What I'm talking about the insanity is that people, I don't know how say this, you havesome dealerships and we know this to where they still.
do trades, that's why I asked you how has it changed for you, is that they still go towhatever website, look at a couple unsold items and say yeah we're going to give that guy
(13:39):
whatever value for his machine without looking at their sold data, without looking atrecent auction results, and to me that's the biggest change from years ago to what it is
now and why I'm so positive and not so concerned about certain things.
because there's so much data that progressive dealerships that are using to make betterdecisions.
(14:03):
So.
Yeah, we don't see it all across the board, but we're starting to see more and more of it,for sure.
Well, how much of, again, back to the customer, in your mind, and it's maybe wrong to askyou this because you're on the data side too, but how much do you think equipment has gone
(14:24):
up in the last three years?
I'd say almost 100%.
Yeah.
They almost doubled in the last three years from what we're, you know, paying in terms ofan input as a farm, especially if we're to keep up.
You know, we haven't replenished our equipment recently, but yeah, about 100%.
(14:48):
I guess where I was going with that is that the costs have gone up so much, but yet westill are doing things the way we used to do it.
Not us.
I'm just saying.
We all need to...
Not all.
I'm just saying you have to change.
You can't keep doing the same things over and over again.
(15:09):
again, there's the positive going into this current downturn.
I mean the reason why I'm positive about it is just because of all the changes we made.
You know, we're more aggressive on certain things.
We're adjusting pricing maybe faster than normal.
We're not going to be sitting here three years from now with a bunch of used equipment.
(15:29):
I mean it's a pretty positive thing with Titan Machinery.
I know many, many, many green guys, same type of thing.
Of how they used to operate to what they operate now.
It's different.
Everybody quick break from the show and then we're going to get you right back to theconversation.
But I wanted to take a moment to let you know how Tractor Zoom is partnering with all ofour dealership partners to fuel their dealership growth.
(15:54):
We're doing that with Tractor Zoom Pro to give people better valuations, faster access toit and the ability to manage their inventory using AI, using large data, even if the
dealership doesn't have the capacity to develop the AI and the large data themselves.
It's all there within Tractor Zoom Pro and also with Anvil Pro.
integrated business systems solution.
(16:14):
You can actually cut costs by integrating solutions, not paying for all these extraone-offs, and keep people in the same solution so you're not constantly switching screens.
And then you could optimize your workflows, do a lot of things with automation thattechnology should be able to do right now.
So just two ways that Tractor Zoom is working with our dealer partners to really help themfuel their dealership growth.
(16:36):
Okay, you can check out some links in the show notes.
You can also go to tractorsoompro.com to check all that stuff out.
but we'd love to at least show you all the different ways that we're helping ourdealership partners.
Okay, let's get back to the show.
Hope you're enjoying it.
And that kind of gets to the next question.
I'm probably gonna even skip asking you this question, because the next one I was gonnaask you is strategies that you're implementing to move more equipment now or things, ways
(16:59):
that you've adapted now versus the way things worked before.
And so what I hear you say is, know, pricing, looking at repricing more frequently, youknow, using data to make your decisions.
probably a lower overall stock of inventory going forward for foreseeable future Iimagine, right?
All those things, adjust your ordering.
(17:20):
know, we joked, there's a, let's call it a short line order, I don't want to throw anybodyunderneath the bus, but I'll just call it short line, meaning non-case age, non, would be
a non-joke.
Not a main manufacturer.
Sure, you need to order because it's not available for...
(17:42):
12 months, 18 months, right?
Need to order extra.
Connor Parker made a calendar event, this is just funny, for two years from thatconversation.
And the calendar event came up here just a few days ago.
In October of 2024, the calendar event was originated in October of 2022.
(18:06):
And the discussion, the meeting was gonna be about
Aged new short lines that were on our lot because we over ordered.
The biggest thing about the lead there during the covid years, we all just need to put itout of our mind.
(18:31):
Don't use any data points from it.
Don't use any selling tactics from it.
Just put it out of our mind.
It's not natural.
It's not normal.
Unprecedented.
And we just need to forget about those three years.
Yep.
Appreciate that they were here, but same thing on the farm.
(18:52):
I'm not expecting $7 corn anytime soon.
Well, $7 corn, 3.5 % interest, 3 % interest, right?
To answer your question, though, I sort of off on a tangent there about the changes.
Yes, faster price changes.
maybe more aggressive price changes than we did in the past.
(19:17):
You you can buy down the interest costs as much as you want.
If the farmer income is not there, doesn't matter how low the interest costs are.
But it's about...
when they do need to buy that it is that your equipment is on current market pricing.
(19:39):
It's not like they're just going quit buying.
mean, people still have need.
They still have agency inventory.
People still break down.
There's still activity going on.
They're still farming.
Just because the commodity prices are low and the equipment values are taking a steep divedoesn't mean that you're not going to be farming or harvesting, right?
(20:01):
Right.
So I'm doing my part in breaking the combine down.
So I'm flushing that stuff through the system.
Even though it's green, we do appreciate it.
Okay.
Parts of service does appreciate it when you break down.
How's your, the Lego combine still working?
The Lego combine, it worked for a little while.
(20:22):
and actually it was probably 300 bushel coin that ended up breaking the gearbox on theBubbler Auger.
So I can't complain that much about it, but that was a relatively quick fix.
The next one was.
You know, that's You're right.
You have nothing to complain about.
300 bushel corner.
Yeah.
We'll have a few broken pieces.
Okay.
(20:42):
And say thank you for those broken pieces.
Good.
Okay.
So I want to take conversation and let's shift forward then a little bit and look maybe atsome more granular things and also into 2025 beyond.
So we kind of already hit on the interest rates or financing.
(21:04):
Well, actually we hit on interest rates.
Financing, was actually maybe a good question.
Are you guys seeing any effect, whether it's OEM level financing or being creative withfinancing deals and helping move used equipment?
All the above.
mean, you're creative, whether it be internal programs, whether it be buying down interestrates, whether the manufacture programs.
(21:27):
I mean you use everything in the arsenal.
mean, to buy down interest rate to 0%, I mean, you truly think about it.
You kind of laugh sometimes when it's 0 % for three years.
We all know it's not 0 % for three years.
Somebody's paying for it.
(21:49):
Right.
might not be that farmer, somebody's paying for it.
But you try buying down interest from 7.5 % or 7 % or 6.5 % down to 0 % on a three-yearterm.
It's a few dollars.
Yeah, that is, especially when you're new equipment or even like new.
(22:10):
Six figures at 6%.
That's a lot.
Yeah, everybody's being creative, but it still comes down to...
the income.
mean, if your unit is sitting there and it's working, maybe if you have a $50,000 repairbill, then maybe, do I buy?
(22:33):
But if a $10,000, $20,000 repair bill, yeah, I think I'll repair it.
I'll wait a year.
But again, as I said earlier, this is nothing new.
Dealerships have been through it.
The good dealerships.
The ones that change, they're the ones that change.
(22:56):
You just a different way of doing business now.
I was like, people say it was back to going back to normal.
the funny thing is we should have stayed normal even during the hot times.
Right.
Yeah.
That's time to fix the roof is when the sun is shining.
That is correct.
I had a good counterpart here, Titan, that, strongly suggested that we should have, evenwhen we had low inventory.
(23:24):
that we possibly should have done some auction stuff during peak times.
Really?
It's about keeping your inventory low.
Auctions are a bad thing.
I don't want anybody to me hate mail.
We're in a retail business.
We're here to take farmers, we're here to give them good values for their used equipment.
(23:49):
We're not an auction place.
But we all know we all use auctions.
for bandwidth to get rid of some inventory and get it off our books.
I'm just saying that colleague of mine that suggested it.
the auction results would have been a hell of a lot better than what dealers are gettingnow.
(24:10):
I think his point was to be opposite of what everybody else is doing, Yeah, there's justsome wisdom in that zig when everybody else acts.
Yeah, yeah, So to answer your question about the creative stuff, financing, warranty,extended warranties, all type of things.
(24:31):
this little shout out for tight machinery.
So every used equipment at tight machinery that is seven years or newer comes with awarranty.
Granted, there's some hour limitations there and in four years you get a little bit betterwarranty, but you get a warranty.
And not every dealership across the country does that.
I did not know that.
(24:51):
yeah?
Anything that you buy that for sure is four years or younger, you get one hell of awarranty.
Huh, that's good.
I've got some analysis I just did for that last webinar and some I'm going to do focusedon warranty, remaining warranty unused, and to see what valuation separation that provides
versus things that don't have warranty.
(25:13):
My initial stab at it shows significant difference.
There is, yes.
And I even tell you, so I do the, my team does the evaluations.
We use data points.
And our job is to...
be reflective of the market, not the auction market, be reflective of what a dealershipshould be able to do, and put a value on that machine.
(25:39):
If I know that there's warranty on that machine, whether it be a two-year, premierwarranty or even a year premier warranty, that used unit is going to get extra value.
Does it get diminished a little bit in this steep decline?
Sure it does, because it's a race to the bottom.
(25:59):
But as things level out, maybe at the end of 2025, early 2026, those units with thatwarranty is going to be a higher value at a premium value compared to a unit that does not
have it, for sure.
OK.
So on that topic, not warranties, but
(26:21):
called attachments that you're trying to value, the things that are not necessarily hardbolted on by the manufacturer.
So I'm upgrade kits on planters, any kind of technology, GPS units.
How do you guys, the potential, the variability is a lot, right?
(26:42):
If you talk about all the different bolt-ons after OEM upgrade kits, how do you or do youplace a value?
on that type of equipment.
I'll say this about kits.
There's always been upgrade kits.
There's always been something.
(27:03):
Whether it 10 years ago, 15 years ago, whatever.
Do we put an extra special value because of some fancy kit?
I'm going to answer it two ways.
One with a statement from a pretty good colleague of mine named Sam.
(27:26):
when it comes to precision.
His argument is that there is, you put precision on a unit and he trades it in in twoyears, is there value to that precision equipment?
So I'm gonna ask you first before I answer.
You as a farmer, you just spent $50,000 or $100,000 on a precision kit.
How much do you as a farmer think it's worth two years from now?
(27:51):
To me or to somebody else?
However, you paid $100,000, you're one of the-
wrote the check.
$100,000 may be steep for me to invest in Precision, but that's just for our farm.
Call it $50,000.
Right, right.
To answer your question, if it's doing what I think it should be doing, I think it shouldstill have value.
(28:15):
Call it $40,000.
I don't think it'd depreciate as long as I invested in it I still believe in it.
I think it would have a high retention value.
To you.
To me.
But, and that's where I think the precision piece gets really tricky is because, you know,it depends on my farm, you know, my ground, my equipment, and the research that I've done
(28:42):
online and who I follow to, you know, to think of that ROI.
It may not translate to the guy just across the field because his field might even besquare like mine, but he's looking at a different website.
and getting his research from somewhere else.
So $50,000 with 30 % margins.
Okay.
(29:03):
We know all technology the minute you buy it, lost 50 % in value.
Right?
Yeah.
Anyway, back to Sam.
His comment to me one day, he goes, I think it's worth nothing.
The farmer got to return for that unit in the field already.
Right?
Potentially.
(29:23):
You look at, you're on the auction data side quite a bit.
And I know that you've looked at it Andy, because of the way that your data mining goes.
You tell me how much of a different auction result is there same model, same everything.
Let's take a John Deere.
John Deere is a popular planner.
(29:46):
I'm not gonna say DB 60, whatever.
One has precision, one does not.
What's the value difference at the auction?
The only difference I can tell you there, and I have looked at the DB60s, the differenceis on the electric drives.
So because you do need an electric drive if you want to expand out and go precision.
(30:07):
And so you will find a value differential there.
You might get some on a bulk filler, know, liquid fertilizer or something.
But when you start talking about the actual precision, you don't see it.
No.
You don't at all.
The capability, yes, but the precision, the upgrade kits itself, you don't see thattranslate into the auction values.
(30:33):
N is really small.
There's not many sample sizes to compare apples to apples, but...
That's the tough thing about the data points.
mean, people that are a lot smarter than me and people that went to school for it, we allknow that a few data points does not tell the story.
Give me a thousand data points.
tells a pretty good story.
(30:54):
To your question though, what value do we put on those kits, those attachments and thosetype of things?
Not a lot, right?
Back in the day, you're probably too young, but back in the day when the 2388 had astandard rotor compared to one with an AFX rotor, right?
(31:16):
Did you necessarily put a $2,000 extra value because that AFX rotor?
Well, heavens no.
There's 30 % margin on parts, there's labor to install it, I mean.
I'm not going to say that there's no value, but to answer your question, not a lot.
Values, what somebody's willing to pay for it.
I agree.
And you're not the first person that's told me that either.
(31:38):
That it's a goose egg when it comes to those for the trade.
If it still has value to the farmer and that was the way it goes for us, then you unboltit and you put it aside and you rebolt it onto whatever else you buy.
know, don't Casey Seymour, I know that you know him, but he talked about it for years interms of,
that planner, sure, go buy the toolbar from the planner or from an auction.
(32:04):
Right.
There's how many unsold 24 row 30s?
It's got to be 700, 800 unsold 24 row 30s.
Pick a color.
They're all kinds.
Go out, buy the bar, buy it from an auction, dump everything off, put all new row units onit.
For sure.
Yeah, that's a different thing.
It does have value.
(32:25):
not the $150,000 that you might have put into it, but in that particular case, yes, theupgrade kit has value.
That's a good way to put it.
Before we make any precision people take that us any more than we Let's go on.
(32:47):
So I've talked to a lot of financial institutions, but especially this year's last sixmonths.
there's a lot more chatter about leasing, lot more interest in leasing.
Do you guys see that as well at Titan?
Yeah, you know, another part of my job is that we do the lease returns, right?
(33:09):
We help facilitate to help keep the stores aware when their lease maturities are comingup.
So I've been pretty heavily involved in the number of leases per year.
Our number really has not fluctuated a great deal.
Even during the COVID years.
(33:31):
So when you asked me that question and I saw it on your earlier notes, yeah, there was alittle bit of a spike, but...
I want to...
I'm going through some data points in my head.
There's a lot of files up there.
I'm just trying to grab the right one, right?
Yeah.
(33:54):
I do think that there's going to be more leases just because of the price, right?
Of the equipment.
Although manufacturers are getting, we all know manufacturers, they're going to minimizetheir risk completely.
They're going to shift that risk to the dealerships and or shift that risk to thecustomer.
(34:14):
And with the tax laws and stuff like that, it hasn't been as advantageous to do leases.
And again, back to the manufacturers got hurt so bad 16, 17, because they were, it wastheir finance companies that was carrying the paper, correct?
And all that inventory and all that residual that they set, set a residual for 100 and nowit's worth 50.
(34:41):
And that was billions of dollars.
So you saw a little bit of dip on leasing just because the rules changed so drastically.
I do think, to answer your question, I do think there'll be more leasing going on.
And one of the primary reasons I think is because that farmer with assets on his books,you know, when you buy something, right, it's an asset to your books, finance it.
(35:09):
you have a finance contract, you own it.
Well, that piece that you bought at whatever value is now lost in a very short time, awhole lot of value.
some of the leases that you can do is that you can walk away from that lease.
Right.
(35:31):
Short answer to your question, yes, I do think there'll be more leases.
Just not a ton that I think most people might think because the rules have changed sodrastically from the manufacturer to the finance companies.
They keep shifting that risk away from their books.
That's good answer and it's a good historical perspective too to kind of understand whathappened back in 15 and 16 and they obviously they have an institutional memory of what
(35:59):
that was like.
And so they're going to respond differently.
It's called shareholders?
They don't forget.
I just, you know, on on the, our side of the fence, our side of the, of of the paintstand, I know how many pieces of equipment that they got stuck with.
(36:23):
And there was a ton.
All those combine leases.
mean, me and you both know, because you see the auction data, but
Those combines, you can start losing a hundred thousand, 200 thousand dollars per piece ifyou're watching your Ps and Qs.
Right.
And even when you are watching your Ps and Qs.
It's still gonna happen.
Still gonna happen.
(36:43):
Just not as much though.
Last question I do want to ask you though is a piece of advice that you've received that'sapplicable now.
And you've already given me tons of advice.
So you can repeat it if you want.
But yeah.
So in today's times, what...
know what's a good piece of advice that you received or you just think that other peopleshould keep in perspective?
(37:05):
Is that when you go home at night and you can ask yourself did you do a good day's work?
Did you do some good things?
you can answer yes it was a good day.
You ask yourself that every day.
When you get up in the morning, we choose.
I mean we literally choose whether we're gonna have a good day or a bad day.
(37:31):
choose how you wanna be.
I mean it's our choice.
There's my advice.
Choose how you're gonna approach each day because literally it is your choice.
That is fantastic.
And we're going to have a whole list of Don quotes out of this podcast.
(37:52):
is...
I will tell...
Okay, here's one more.
When you're cleaning the sinks in the bathroom, okay?
Tuesdays and Thursdays.
You use the blue stuff, right?
And spray away from you, not at you.
Okay, I'm going to take that that you've got some personal experience there.
Yes, I do.
(38:14):
Good deal.
Well, Don, hey, I appreciate the time.
I appreciate the fatherly advice that you bestowed not just on me, but all the listeners.
And yeah, your perspective and what Titan is doing has been good.
Certainly helpful.
So what you just told everybody is that I'm old.
(38:35):
Older.
It's all relative, right?
It's all relative.
You're showing it in the beard right now.
Give a shout out to Blake.
Harvin down in Pella, Iowa where Andy is at today.
Titan Machinery.
look at that.
He's got that poignant thing right down right up to Titan Machinery.
Really good at that.
Dude, this under the hood thing is pretty good.
(38:55):
You keep doing it, okay?
Yeah, I appreciate Titan and I appreciate you Don and look forward to seeing you at MoominIron here in a little while.
See you in Nashville buddy.
Take care.
Okay, take care.
Thank you.
Beyond the Hood, stories and strategies to fuel dealer growth.
Welcome everyone to another episode of Beyond the Hood with Tractor Zoom.
I'm your host, Andy Campbell, and our guest today needs no introduction in the world ofused farm equipment.
In fact, I just got to spend the last couple of days with him down in Nashville at theMoving Iron Summit.
(00:30):
And this gentleman not only can teach you a ton about how to manage used farm equipment, Ihe helps manage one of the largest dealerships in the world, but his
take on life will leave you with a smile, to put it simply.
There's a great philosophical conversation that he and I have, as well as getting into thetechnicals of what he sees in the market and where he thinks this market might be going in
(00:56):
2025.
So without wasting any more time, I wanna introduce to you Don Oberle of Titan Machinery,the senior manager of used equipment and sales.
Let's begin that conversation right now.
Don Oberle from Titan Machinery.
I'm the equipment guy here.
I've been with Titan for about 23 years.
(01:17):
I have always gravitated towards the used equipment side of it.
I do bathrooms on Tuesdays and Thursdays, if you need any...
Multifaceted.
...any janitorial work, you let me know.
But I just, it's...
I've always been around used equipment.
(01:38):
Maybe that's why I gravitated into this role.
We also do lead up to team for inside sales here at the company.
But again, most everything I do is about used equipment.
Okay.
Well, then this next question should be right up your alley about challenges that we'refacing right now at the end of 24.
(02:02):
Could be inside sales question as well, but what are some of the biggest challenges thatyou at Titan are facing as we...
get to like a month, two months away from the end of 2024?
I think like most dealership, the challenges we all face in these down cycles is dealingwith the pricing.
(02:22):
You know, what we bought that unit for, whatever value we might've given six months ago,12 months ago.
And that's probably the biggest thing is a lot of the values on the machines were given awhile back when that deal was done, right?
But because of the manufactured delays and deliveries, you know, during COVID and thentrying to get out of that.
(02:48):
Some of those values from what we all know this year ago, six months ago are completelywrong.
So I'd say one of the biggest challenges that dealerships face and even us, although we dohave a pretty consistent pricing review process.
to try to keep up with the downturn.
(03:12):
But one of the challenges is that value or what you wrote a check for that unit or whenyou made that deal, right?
You might have told that farm $100,000 and now that unit's worth 90.
As a dealership though, you're not about to go back out to that customer and tell them 90,right?
You're gonna honor your deal.
(03:32):
I think we've recently seen a TikTok thing that I would recommend.
not do it math.
Dealerships are the, you know, when it comes to farming, those communities, thatdealership is like the coffee shop, right, for the farmers?
Your trusted partner, your word means everything, and regardless of the situation, youkeep your word.
(04:02):
I know that question was about challenges, it is just one of those things.
That challenge is you told them it was worth $100, now it's only worth $90, but you'rewriting a check, the equipment showed up, and now you're doing the financing part of it.
Now checks or money's exchanging hands.
And you lost $10,000, right?
A smaller dealership, it hurts just as bad as a big dealership because the big dealershiphas maybe more deals, right?
(04:27):
Right.
But it's all relative.
It still hurts.
Right.
Yeah.
that's one of the challenges is knowing that you're honoring that deal, knowing thatyou're keeping that word when the new unit shows up, knowing that you're already behind
the eight ball.
Yeah.
And I see how that's tough for dealerships.
(04:49):
And as a farmer, though, I can also appreciate how important that is for the continuity ofrunning your operation, because we've been down three times this year with combine issues.
and having that trust of, if it does go down, can you call somebody?
Can you get parts?
Even if you have to drive a little further to get the part, can it arrive?
(05:10):
Because if you don't have that assurance that you can keep on running, it's harder to evenfathom how you get a crop in.
We go back to loyalty or farmers still loyal.
Farmers, I believe, by and are loyal to that dealership.
(05:31):
to that dealership that's going to come out and service you at 10 o'clock at night or Ican call 24-7 since when does a farmer work 8 to 5, right?
That's as I've been here.
That dealership trust and that relationship with the farmer is absolutely critical.
In all my years at Tide Machinery, has always been Dave Meyer as our CEO, PeterChristensen used to back in the day, but Dave Meyer mainly.
(05:59):
Now BJ Knudsen, mean, there's just, from the very top, the number one thing is thatcustomer.
And I believe that in a lot of dealerships, that number one thing is the customer.
And this might then lead into the second question I wanted to ask you.
So I might even ask you for two of the positives that you're looking forward to, thatyou've either seen this year or you're looking forward to next year.
(06:22):
And let's just assume one is customer loyalty, because I do agree with you that it'ssomething that can carry people through some load times.
But are there any other positives that you're seeing?
Back to load times, it goes both ways.
Dealerships, you know, that loyalty from the customer back to the dealership, the loyaltyfrom the dealership to the customer, it helps out both of us in the load time.
(06:47):
The positives?
positives is we've been through this before.
Every dealership has been through it before.
As long as you stay consistent, right?
If you've implemented processes, what I'm excited about is tight machinery through themany, many years and a lot of great leaders before us.
(07:11):
I mean, there's just processes that we have in place that will help us get through thistime.
will have an impact on our margins?
Sure it will.
Will it have an impact on our cash flow?
Sure it will.
But there's no...
The positive is that there's minimal concern because of those processes that are in placethat you have to have in place or you should have in place.
(07:38):
Because these...
positives.
So I just got to bring back up.
So 14, 15, 16, 17, right?
We all went through it?
And the positives for us.
is the willingness to change, the willingness to put new ideas into place.
(08:06):
And that has occurred.
So the positive for me at Tite Machinery is that there's concern, but very limited concernfrom the standpoint of how we will come through it because of the processes and the things
we've learned from before.
(08:27):
From the customer point of view, think the positive is that
They might not be buying equipment from us, but there's dealerships with green, red,whatever.
So now they're not going to buy equipment because they might not have the income, right?
They might spend a few more dollars on parts and service, but they have their localdealerships that loyalty to their local dealership.
(08:54):
They're going to get the service to repair their machines.
positive is that we don't necessarily have the parts challenges that we had over the...
previous few years in terms of supply of getting parts in a timely manner.
So I'd say positive customer size, have local dealerships of fixing machines.
(09:16):
Positive for the dealerships that made changes a few years back is that this downturn isnot going to be so concerning.
And I like how you put that too with the willingness to adopt the processes or hopefullyhave them in place if you don't.
And we've seen the same thing from progressive dealers that saying, okay, now is the timeto really get our stuff together, streamline and buckle down if we haven't yet or
(09:42):
implement those processes.
And you start to see that mindset, the benefit of the mindset in certain dealers that say,okay, this is the time for us to get better, kind of the iron sharpens iron.
It's better if we have a weekly meeting called Be Better.
I mean, it's not a bad thing.
It's just be better than yesterday.
Be better than last week.
(10:03):
It's a mindset that has come from the top down about being better.
So I got to ask you.
So you're a farmer, right?
Yep.
With a side job called the tractor's.
Right.
I'm not sure which one becomes the side job, which one occupies more.
But you've been involved in buying and selling or buying and trading your equipment foryears, right?
(10:32):
So that salesman's coming out and trying to do a deal with you and he's giving you a bootnumber and you're asking how much you're giving for my unit, right?
You've been part of this?
You as a customer, what has changed from how they used to do it to how they're doing itnow?
(10:53):
Is there a change?
Yeah, how the dealership is approaching it?
How that salesman is giving you a value and or
Structuring the deal.
How has it changed from 10 years ago to what it is now?
I'd say not all Experiences have changed some salesmen some dealerships have changed onthe approach some are more traditional still of like here It is take a leave it especially
(11:18):
last few years.
It was certainly a take or leave it You know, there's another buyer stacked up behind itthe Now though, I think especially now especially this year you can see it behind the
scenes of
trying to move the chess pieces before they arrive on a dealer's lots.
(11:38):
So a lot more of, you know, kind of like house, like this sale is contingent on anotherfarmer who is going to hopefully accept a piece of machinery and, you know, which is
largely due to the higher interest rates, I'm assuming, and the unwillingness to take thatextra holding cost on.
And so we see a lot more of those kind of contingent type of deals.
(11:59):
The one thing that I'm starting to see a little bit more of now,
is the presentation of data.
Before it was, there wasn't the transparency within the marketplace of I know whateverything's sold for and the farmer knows almost now more than maybe what a dealer is of
what all the local sales are.
And I'd say what I'm starting to see on the farmer side of it is that realization andacknowledgement that, yeah, the farmer has just as good of data and transparent to the
(12:30):
market is what I do.
I always joke about the insanity.
We all know the definition of insanity, doing the same thing over and over again andexpecting different results, But it's just, as you talk about data, there's so much data,
both for the farmer and for the dealership.
(12:53):
But to go out and, at the end of the day, a dealership is buying your equipment.
$500,000 piece and they're telling you $100,000 to boot.
Well, the farmer, the dealership paid the $500,000 for the new one, Paid $400,000 for yourused piece.
I'm only getting $100,000 out of you.
(13:14):
That's like gosh darn cash outlay, right?
Right.
What I'm talking about the insanity is that people, I don't know how say this, you havesome dealerships and we know this to where they still.
do trades, that's why I asked you how has it changed for you, is that they still go towhatever website, look at a couple unsold items and say yeah we're going to give that guy
(13:39):
whatever value for his machine without looking at their sold data, without looking atrecent auction results, and to me that's the biggest change from years ago to what it is
now and why I'm so positive and not so concerned about certain things.
because there's so much data that progressive dealerships that are using to make betterdecisions.
(14:03):
So.
Yeah, we don't see it all across the board, but we're starting to see more and more of it,for sure.
Well, how much of, again, back to the customer, in your mind, and it's maybe wrong to askyou this because you're on the data side too, but how much do you think equipment has gone
(14:24):
up in the last three years?
I'd say almost 100%.
Yeah.
They almost doubled in the last three years from what we're, you know, paying in terms ofan input as a farm, especially if we're to keep up.
You know, we haven't replenished our equipment recently, but yeah, about 100%.
(14:48):
I guess where I was going with that is that the costs have gone up so much, but yet westill are doing things the way we used to do it.
Not us.
I'm just saying.
We all need to...
Not all.
I'm just saying you have to change.
You can't keep doing the same things over and over again.
(15:09):
again, there's the positive going into this current downturn.
I mean the reason why I'm positive about it is just because of all the changes we made.
You know, we're more aggressive on certain things.
We're adjusting pricing maybe faster than normal.
We're not going to be sitting here three years from now with a bunch of used equipment.
(15:29):
I mean it's a pretty positive thing with Titan Machinery.
I know many, many, many green guys, same type of thing.
Of how they used to operate to what they operate now.
It's different.
Everybody quick break from the show and then we're going to get you right back to theconversation.
But I wanted to take a moment to let you know how Tractor Zoom is partnering with all ofour dealership partners to fuel their dealership growth.
(15:54):
We're doing that with Tractor Zoom Pro to give people better valuations, faster access toit and the ability to manage their inventory using AI, using large data, even if the
dealership doesn't have the capacity to develop the AI and the large data themselves.
It's all there within Tractor Zoom Pro and also with Anvil Pro.
integrated business systems solution.
(16:14):
You can actually cut costs by integrating solutions, not paying for all these extraone-offs, and keep people in the same solution so you're not constantly switching screens.
And then you could optimize your workflows, do a lot of things with automation thattechnology should be able to do right now.
So just two ways that Tractor Zoom is working with our dealer partners to really help themfuel their dealership growth.
(16:36):
Okay, you can check out some links in the show notes.
You can also go to tractorsoompro.com to check all that stuff out.
but we'd love to at least show you all the different ways that we're helping ourdealership partners.
Okay, let's get back to the show.
Hope you're enjoying it.
And that kind of gets to the next question.
I'm probably gonna even skip asking you this question, because the next one I was gonnaask you is strategies that you're implementing to move more equipment now or things, ways
(16:59):
that you've adapted now versus the way things worked before.
And so what I hear you say is, know, pricing, looking at repricing more frequently, youknow, using data to make your decisions.
probably a lower overall stock of inventory going forward for foreseeable future Iimagine, right?
All those things, adjust your ordering.
(17:20):
know, we joked, there's a, let's call it a short line order, I don't want to throw anybodyunderneath the bus, but I'll just call it short line, meaning non-case age, non, would be
a non-joke.
Not a main manufacturer.
Sure, you need to order because it's not available for...
(17:42):
12 months, 18 months, right?
Need to order extra.
Connor Parker made a calendar event, this is just funny, for two years from thatconversation.
And the calendar event came up here just a few days ago.
In October of 2024, the calendar event was originated in October of 2022.
(18:06):
And the discussion, the meeting was gonna be about
Aged new short lines that were on our lot because we over ordered.
The biggest thing about the lead there during the covid years, we all just need to put itout of our mind.
(18:31):
Don't use any data points from it.
Don't use any selling tactics from it.
Just put it out of our mind.
It's not natural.
It's not normal.
Unprecedented.
And we just need to forget about those three years.
Yep.
Appreciate that they were here, but same thing on the farm.
(18:52):
I'm not expecting $7 corn anytime soon.
Well, $7 corn, 3.5 % interest, 3 % interest, right?
To answer your question, though, I sort of off on a tangent there about the changes.
Yes, faster price changes.
maybe more aggressive price changes than we did in the past.
(19:17):
You you can buy down the interest costs as much as you want.
If the farmer income is not there, doesn't matter how low the interest costs are.
But it's about...
when they do need to buy that it is that your equipment is on current market pricing.
(19:39):
It's not like they're just going quit buying.
mean, people still have need.
They still have agency inventory.
People still break down.
There's still activity going on.
They're still farming.
Just because the commodity prices are low and the equipment values are taking a steep divedoesn't mean that you're not going to be farming or harvesting, right?
(20:01):
Right.
So I'm doing my part in breaking the combine down.
So I'm flushing that stuff through the system.
Even though it's green, we do appreciate it.
Okay.
Parts of service does appreciate it when you break down.
How's your, the Lego combine still working?
The Lego combine, it worked for a little while.
(20:22):
and actually it was probably 300 bushel coin that ended up breaking the gearbox on theBubbler Auger.
So I can't complain that much about it, but that was a relatively quick fix.
The next one was.
You know, that's You're right.
You have nothing to complain about.
300 bushel corner.
Yeah.
We'll have a few broken pieces.
Okay.
(20:42):
And say thank you for those broken pieces.
Good.
Okay.
So I want to take conversation and let's shift forward then a little bit and look maybe atsome more granular things and also into 2025 beyond.
So we kind of already hit on the interest rates or financing.
(21:04):
Well, actually we hit on interest rates.
Financing, was actually maybe a good question.
Are you guys seeing any effect, whether it's OEM level financing or being creative withfinancing deals and helping move used equipment?
All the above.
mean, you're creative, whether it be internal programs, whether it be buying down interestrates, whether the manufacture programs.
(21:27):
I mean you use everything in the arsenal.
mean, to buy down interest rate to 0%, I mean, you truly think about it.
You kind of laugh sometimes when it's 0 % for three years.
We all know it's not 0 % for three years.
Somebody's paying for it.
(21:49):
Right.
might not be that farmer, somebody's paying for it.
But you try buying down interest from 7.5 % or 7 % or 6.5 % down to 0 % on a three-yearterm.
It's a few dollars.
Yeah, that is, especially when you're new equipment or even like new.
(22:10):
Six figures at 6%.
That's a lot.
Yeah, everybody's being creative, but it still comes down to...
the income.
mean, if your unit is sitting there and it's working, maybe if you have a $50,000 repairbill, then maybe, do I buy?
(22:33):
But if a $10,000, $20,000 repair bill, yeah, I think I'll repair it.
I'll wait a year.
But again, as I said earlier, this is nothing new.
Dealerships have been through it.
The good dealerships.
The ones that change, they're the ones that change.
(22:56):
You just a different way of doing business now.
I was like, people say it was back to going back to normal.
the funny thing is we should have stayed normal even during the hot times.
Right.
Yeah.
That's time to fix the roof is when the sun is shining.
That is correct.
I had a good counterpart here, Titan, that, strongly suggested that we should have, evenwhen we had low inventory.
(23:24):
that we possibly should have done some auction stuff during peak times.
Really?
It's about keeping your inventory low.
Auctions are a bad thing.
I don't want anybody to me hate mail.
We're in a retail business.
We're here to take farmers, we're here to give them good values for their used equipment.
(23:49):
We're not an auction place.
But we all know we all use auctions.
for bandwidth to get rid of some inventory and get it off our books.
I'm just saying that colleague of mine that suggested it.
the auction results would have been a hell of a lot better than what dealers are gettingnow.
(24:10):
I think his point was to be opposite of what everybody else is doing, Yeah, there's justsome wisdom in that zig when everybody else acts.
Yeah, yeah, So to answer your question about the creative stuff, financing, warranty,extended warranties, all type of things.
(24:31):
this little shout out for tight machinery.
So every used equipment at tight machinery that is seven years or newer comes with awarranty.
Granted, there's some hour limitations there and in four years you get a little bit betterwarranty, but you get a warranty.
And not every dealership across the country does that.
I did not know that.
(24:51):
yeah?
Anything that you buy that for sure is four years or younger, you get one hell of awarranty.
Huh, that's good.
I've got some analysis I just did for that last webinar and some I'm going to do focusedon warranty, remaining warranty unused, and to see what valuation separation that provides
versus things that don't have warranty.
(25:13):
My initial stab at it shows significant difference.
There is, yes.
And I even tell you, so I do the, my team does the evaluations.
We use data points.
And our job is to...
be reflective of the market, not the auction market, be reflective of what a dealershipshould be able to do, and put a value on that machine.
(25:39):
If I know that there's warranty on that machine, whether it be a two-year, premierwarranty or even a year premier warranty, that used unit is going to get extra value.
Does it get diminished a little bit in this steep decline?
Sure it does, because it's a race to the bottom.
(25:59):
But as things level out, maybe at the end of 2025, early 2026, those units with thatwarranty is going to be a higher value at a premium value compared to a unit that does not
have it, for sure.
OK.
So on that topic, not warranties, but
(26:21):
called attachments that you're trying to value, the things that are not necessarily hardbolted on by the manufacturer.
So I'm upgrade kits on planters, any kind of technology, GPS units.
How do you guys, the potential, the variability is a lot, right?
(26:42):
If you talk about all the different bolt-ons after OEM upgrade kits, how do you or do youplace a value?
on that type of equipment.
I'll say this about kits.
There's always been upgrade kits.
There's always been something.
(27:03):
Whether it 10 years ago, 15 years ago, whatever.
Do we put an extra special value because of some fancy kit?
I'm going to answer it two ways.
One with a statement from a pretty good colleague of mine named Sam.
(27:26):
when it comes to precision.
His argument is that there is, you put precision on a unit and he trades it in in twoyears, is there value to that precision equipment?
So I'm gonna ask you first before I answer.
You as a farmer, you just spent $50,000 or $100,000 on a precision kit.
How much do you as a farmer think it's worth two years from now?
(27:51):
To me or to somebody else?
However, you paid $100,000, you're one of the-
wrote the check.
$100,000 may be steep for me to invest in Precision, but that's just for our farm.
Call it $50,000.
Right, right.
To answer your question, if it's doing what I think it should be doing, I think it shouldstill have value.
(28:15):
Call it $40,000.
I don't think it'd depreciate as long as I invested in it I still believe in it.
I think it would have a high retention value.
To you.
To me.
But, and that's where I think the precision piece gets really tricky is because, you know,it depends on my farm, you know, my ground, my equipment, and the research that I've done
(28:42):
online and who I follow to, you know, to think of that ROI.
It may not translate to the guy just across the field because his field might even besquare like mine, but he's looking at a different website.
and getting his research from somewhere else.
So $50,000 with 30 % margins.
Okay.
(29:03):
We know all technology the minute you buy it, lost 50 % in value.
Right?
Yeah.
Anyway, back to Sam.
His comment to me one day, he goes, I think it's worth nothing.
The farmer got to return for that unit in the field already.
Right?
Potentially.
(29:23):
You look at, you're on the auction data side quite a bit.
And I know that you've looked at it Andy, because of the way that your data mining goes.
You tell me how much of a different auction result is there same model, same everything.
Let's take a John Deere.
John Deere is a popular planner.
(29:46):
I'm not gonna say DB 60, whatever.
One has precision, one does not.
What's the value difference at the auction?
The only difference I can tell you there, and I have looked at the DB60s, the differenceis on the electric drives.
So because you do need an electric drive if you want to expand out and go precision.
(30:07):
And so you will find a value differential there.
You might get some on a bulk filler, know, liquid fertilizer or something.
But when you start talking about the actual precision, you don't see it.
No.
You don't at all.
The capability, yes, but the precision, the upgrade kits itself, you don't see thattranslate into the auction values.
(30:33):
N is really small.
There's not many sample sizes to compare apples to apples, but...
That's the tough thing about the data points.
mean, people that are a lot smarter than me and people that went to school for it, we allknow that a few data points does not tell the story.
Give me a thousand data points.
tells a pretty good story.
(30:54):
To your question though, what value do we put on those kits, those attachments and thosetype of things?
Not a lot, right?
Back in the day, you're probably too young, but back in the day when the 2388 had astandard rotor compared to one with an AFX rotor, right?
(31:16):
Did you necessarily put a $2,000 extra value because that AFX rotor?
Well, heavens no.
There's 30 % margin on parts, there's labor to install it, I mean.
I'm not going to say that there's no value, but to answer your question, not a lot.
Values, what somebody's willing to pay for it.
I agree.
And you're not the first person that's told me that either.
(31:38):
That it's a goose egg when it comes to those for the trade.
If it still has value to the farmer and that was the way it goes for us, then you unboltit and you put it aside and you rebolt it onto whatever else you buy.
know, don't Casey Seymour, I know that you know him, but he talked about it for years interms of,
that planner, sure, go buy the toolbar from the planner or from an auction.
(32:04):
Right.
There's how many unsold 24 row 30s?
It's got to be 700, 800 unsold 24 row 30s.
Pick a color.
They're all kinds.
Go out, buy the bar, buy it from an auction, dump everything off, put all new row units onit.
For sure.
Yeah, that's a different thing.
It does have value.
(32:25):
not the $150,000 that you might have put into it, but in that particular case, yes, theupgrade kit has value.
That's a good way to put it.
Before we make any precision people take that us any more than we Let's go on.
(32:47):
So I've talked to a lot of financial institutions, but especially this year's last sixmonths.
there's a lot more chatter about leasing, lot more interest in leasing.
Do you guys see that as well at Titan?
Yeah, you know, another part of my job is that we do the lease returns, right?
(33:09):
We help facilitate to help keep the stores aware when their lease maturities are comingup.
So I've been pretty heavily involved in the number of leases per year.
Our number really has not fluctuated a great deal.
Even during the COVID years.
(33:31):
So when you asked me that question and I saw it on your earlier notes, yeah, there was alittle bit of a spike, but...
I want to...
I'm going through some data points in my head.
There's a lot of files up there.
I'm just trying to grab the right one, right?
Yeah.
(33:54):
I do think that there's going to be more leases just because of the price, right?
Of the equipment.
Although manufacturers are getting, we all know manufacturers, they're going to minimizetheir risk completely.
They're going to shift that risk to the dealerships and or shift that risk to thecustomer.
(34:14):
And with the tax laws and stuff like that, it hasn't been as advantageous to do leases.
And again, back to the manufacturers got hurt so bad 16, 17, because they were, it wastheir finance companies that was carrying the paper, correct?
And all that inventory and all that residual that they set, set a residual for 100 and nowit's worth 50.
(34:41):
And that was billions of dollars.
So you saw a little bit of dip on leasing just because the rules changed so drastically.
I do think, to answer your question, I do think there'll be more leasing going on.
And one of the primary reasons I think is because that farmer with assets on his books,you know, when you buy something, right, it's an asset to your books, finance it.
(35:09):
you have a finance contract, you own it.
Well, that piece that you bought at whatever value is now lost in a very short time, awhole lot of value.
some of the leases that you can do is that you can walk away from that lease.
Right.
(35:31):
Short answer to your question, yes, I do think there'll be more leases.
Just not a ton that I think most people might think because the rules have changed sodrastically from the manufacturer to the finance companies.
They keep shifting that risk away from their books.
That's good answer and it's a good historical perspective too to kind of understand whathappened back in 15 and 16 and they obviously they have an institutional memory of what
(35:59):
that was like.
And so they're going to respond differently.
It's called shareholders?
They don't forget.
I just, you know, on on the, our side of the fence, our side of the, of of the paintstand, I know how many pieces of equipment that they got stuck with.
(36:23):
And there was a ton.
All those combine leases.
mean, me and you both know, because you see the auction data, but
Those combines, you can start losing a hundred thousand, 200 thousand dollars per piece ifyou're watching your Ps and Qs.
Right.
And even when you are watching your Ps and Qs.
It's still gonna happen.
Still gonna happen.
(36:43):
Just not as much though.
Last question I do want to ask you though is a piece of advice that you've received that'sapplicable now.
And you've already given me tons of advice.
So you can repeat it if you want.
But yeah.
So in today's times, what...
know what's a good piece of advice that you received or you just think that other peopleshould keep in perspective?
(37:05):
Is that when you go home at night and you can ask yourself did you do a good day's work?
Did you do some good things?
you can answer yes it was a good day.
You ask yourself that every day.
When you get up in the morning, we choose.
I mean we literally choose whether we're gonna have a good day or a bad day.
(37:31):
choose how you wanna be.
I mean it's our choice.
There's my advice.
Choose how you're gonna approach each day because literally it is your choice.
That is fantastic.
And we're going to have a whole list of Don quotes out of this podcast.
(37:52):
is...
I will tell...
Okay, here's one more.
When you're cleaning the sinks in the bathroom, okay?
Tuesdays and Thursdays.
You use the blue stuff, right?
And spray away from you, not at you.
Okay, I'm going to take that that you've got some personal experience there.
Yes, I do.
(38:14):
Good deal.
Well, Don, hey, I appreciate the time.
I appreciate the fatherly advice that you bestowed not just on me, but all the listeners.
And yeah, your perspective and what Titan is doing has been good.
Certainly helpful.
So what you just told everybody is that I'm old.
(38:35):
Older.
It's all relative, right?
It's all relative.
You're showing it in the beard right now.
Give a shout out to Blake.
Harvin down in Pella, Iowa where Andy is at today.
Titan Machinery.
look at that.
He's got that poignant thing right down right up to Titan Machinery.
Really good at that.
Dude, this under the hood thing is pretty good.
(38:55):
You keep doing it, okay?
Yeah, I appreciate Titan and I appreciate you Don and look forward to seeing you at MoominIron here in a little while.
See you in Nashville buddy.
Take care.
Okay, take care.
Thank you.
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