Key Market Factors in 2025
Equipment categories and sales segments to watch
Financing outlook and considerations
Following a year of decreasing commodity prices and projected farm income, the agricultural equipment market is entering 2025 with a mix of opportunity and uncertainty.
“In 2024, we saw a slowdown in machinery purchases compared to the previous few years, however, equipment continued to move at a pace that frankly surprised many throughout the industry,” says Lucas Scheibe, an AgDirect territory manager in North Dakota.
“The most obvious trend in 2024 was the vast numbers of machines being sold at auction. Many dealers placed high priority on moving late-model, high-dollar used machines and aged inventory to the auction channel to free up working capital.”
In response, AgDirect saw the largest year-over-year growth in auction and private party financing in its 26-year history. Leasing activity began increasing in the second half of 2024 as producers began exploring methods to reduce equipment costs. Scheibe anticipates leasing will continue to be a tool producers will utilize moving into 2025.
Key Market Factors in 2025
Looking ahead, several key factors will shape equipment buying trends and behavior:
Inventory Management: Inventory management will be a key factor to watch as dealers and OEMs work to strike a careful balance of new and used equipment on lots this year. Many major OEMs are forecasting flat to slightly declining new machine sales for 2025.
“Inventory management continues to be a high priority with many dealers still concerned about the number of aged units, or 1- to 2-year-old high dollar units, that may not be in a demand cycle for selling at a premium price – such as combines,” says Scheibe. “They may be forced to decide: ‘Should we carry the inventory into the next demand cycle or dispose of the unit at auction?’”
Economic and Policy Uncertainty: Producer sentiment remains positive with the new administration signaling deregulation and a more favorable tax climate. On the other hand, lower projected farm incomes, trade tariffs and potential immigration reform introduce some uncertainty.
Interest Rate Environment: The Federal Reserve’s anticipated 150-basis-point rate cut for 2025 has since been revised down to just 50 basis points, dampening expectations for significant relief. This will continue to be a headwind in the current rate environment. With lenders competing for business more than ever, producers are likely to shop around to find a rate and product that fit their needs, making it important to stay informed on competitive financing options.
Equipment Categories and Sales Segments to Watch
Concerns over the high cost of new equipment have led many producers to shift their replacement strategies. Some are 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.
“We have seen used equipment demand increase as higher prices on new units continue to plague producers when attempting to find a balance of cost per acre and profitability,” Scheibe shares. “With lower farm incomes projected into 2025, we will likely see continued demand for good, used iron in the marketplace.”
While auctions have become a routine avenue for equipment acquisitions – with many producers now willing to take on the risk of purchasing units sight unseen – Scheibe notes the surge in auction activity in 2024 may have helped dealers ‘right-size’ used equipment inventory levels.
As a result, the steep discounts seen at auction a year ago may diminish as supply stabilizes. Additionally, there may be a continued emphasis from dealers on ensuring that highly specialized inventory – such as combines, forage harvesters, sprayers, and planting/seeding equipment – is kept in check.
“There may not be a widespread slowing by product categories, however you may see dealers attempt to clean-up aged inventory on an individual basis by sending units to wholesalers or auctions, especially as they attempt to strike a balance of keeping a good supply of inventory on hand while measuring the cost to carry this inventory throughout the calendar year,” Scheibe says.
“Typically, shortline products, such as tillage implements or grain carts, are the first to be cut from dealer inventories as they tie up working capital and are difficult to forecast for sales in certain areas,” he adds. “Sales of planters and drills may slow as well as producers find ways to extend their lifespan through increased maintenance or installing new wear parts.”
Financing Outlook and Considerations
Looking at the year ahead, Scheibe predicts producers may take a wait-and-see approach in the first half of 2025, potentially delaying equipment upgrades as the spring planting season approaches. However, if policy and tax conditions remain favorable, improved commodity prices could bolster farm income and influence buying decisions.
One bright spot in the market is strong livestock prices, which are providing some financial stability for producers. Still, challenges remain, particularly regarding trade policies, immigration reform and ongoing inflationary pressures, all of which could impact farm profitability. While producers will continue reinvesting in their operations, overall spending on equipment may be slightly lower than in 2024.
“In 2025, producers will be looking for smarter ways to deploy capital. A larger down payment on a loan can sometimes be a barrier to acquisition, and there are many lease structures that may assist in conserving working capital while keeping costs comparable or even lower than a loan,” Scheibe explains.
“As the year progresses, some operations may find themselves needing additional cash. For those who purchased equipment the past 12 months, AgDirect offers options such as a purchase leaseback or refinance reimbursement to help replenish working capital.”
AgDirect offers competitive rates and terms for both new and used equipment purchases at the dealership, at auction (both in person and online) and via private party.
Apply online, check rates, quote payments and compare options at agdirect.com or using the free AgDirect Mobile app available for download from the App Store and Google Play*. Or learn more about AgDirect equipment financing by locating the nearest AgDirect territory manager or contact the AgDirect financing team at 888-525-9805.
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