Remaining value development of tractors ‒ a call for the application of a differentiated market value estimation

Abstract

Estimates of market values are important for decisions about type and economic useful life of tractors as well as for assessing appropriate used prices. In this context, a linear relationship between the value and both the intensity of use and the age is often assumed. Differences between manufacturers, power classes or configuration are insufficiently considered. This paper shows that market values and thus also the development of remaining values can be better described with nonlinear functions, in particular with exponential functions. It shows that the development differs between manufacturers and power classes. On the basis of online advertisements we estimate market values using multiple linear regression models. They are validated with auction results and compared with the remaining value formula of the KTBL. The models based on online advertisements appear to be suitable to represent real sales. In some cases substantial differences in the devaluation costs of individual power classes but also manufacturers arise from a differentiated consideration of the remaining value based on the market value. In simple applications, average considerations are sufficient, but in the case of short usage periods, low utilization rates and small power classes, we recommend to estimate an individual remaining value. For this purpose as well as for an objective assessment of the market values of used tractors we provide the respective parameters in the appendix.