IDEAS home Printed from https://ideas.repec.org/a/gam/jagris/v13y2023i10p2002-d1260222.html
   My bibliography  Save this article

Agricultural Tractor Retail and Wholesale Residual Value Forecasting Model in Western Europe

Author

Listed:
  • Ivan Herranz-Matey

    (Departamento de Ingeniería Agroforestal, ETSIAAB, Universidad Politécnica de Madrid, Av. Puerta de Hierro, 2, 28040 Madrid, Spain)

  • Luis Ruiz-Garcia

    (Departamento de Ingeniería Agroforestal, ETSIAAB, Universidad Politécnica de Madrid, Av. Puerta de Hierro, 2, 28040 Madrid, Spain)

Abstract

The residual value of agricultural tractors plays a pivotal role in the financial viability of agribusiness enterprises. Nevertheless, there is a dearth of comprehensive studies concerning the prognostication of both retail and wholesale residual values specific to agricultural tractors within the context of Western Europe. This research introduces an innovative methodology for assessing the residual worth of agricultural tractors, with particular consideration given to the substantial pricing discrepancies between retail and wholesale transactions. Leveraging publicly available auction data, we develop a polynomial regression model aimed at forecasting the intricate relationship between retail and wholesale residual values. Notably, the model demonstrates an exceptional robustness, surpassing previous research endeavors, as evidenced by a remarkably low root-mean-square error (RMSE) of 0.0159 and a combined adjusted coefficient of determination (RSqAdj) of 0.9997. The findings of this study offer invaluable insights into a diverse array of stakeholders, empowering them to make well-informed decisions regarding machinery specifications, investment strategies, and asset disposal choices, thereby facilitating optimal financial performance.

Suggested Citation

  • Ivan Herranz-Matey & Luis Ruiz-Garcia, 2023. "Agricultural Tractor Retail and Wholesale Residual Value Forecasting Model in Western Europe," Agriculture, MDPI, vol. 13(10), pages 1-21, October.
    • Handle: RePEc:gam:jagris:v:13:y:2023:i:10:p:2002-:d:1260222
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2077-0472/13/10/2002/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2077-0472/13/10/2002/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Timothy L. Cross & Gregory M. Perry, 1995. "Depreciation Patterns for Agricultural Machinery," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 194-204.
    2. Donald W. Reid & Garnett L. Bradford, 1983. "On Optimal Replacement of Farm Tractors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 326-331.
    3. James Unterschultz & Glen Mumey, 1996. "Reducing Investment Risk in Tractors and Combines with Improved Terminal Asset Value Forecasts," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 44(3), pages 295-309, November.
    4. Emi Nakamura, 2008. "Pass-Through in Retail and Wholesale," American Economic Review, American Economic Association, vol. 98(2), pages 430-437, May.
    5. LeRoy Hansen & Hyunok Lee, 1991. "Estimating Farm Tractor Depreciation: Tax Implications," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 39(3), pages 463-479, November.
    6. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2023. "Agricultural Combine Remaining Value Forecasting Methodology and Model (and Derived Tool)," Agriculture, MDPI, vol. 13(4), pages 1-15, April.
    7. Jing Wu & Gregory M. Perry, 2004. "Estimating Farm Equipment Depreciation: Which Functional Form Is Best?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 483-491.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2024. "New Agricultural Tractor Manufacturer’s Suggested Retail Price (MSRP) Model in Europe," Agriculture, MDPI, vol. 14(3), pages 1-21, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2024. "New Agricultural Tractor Manufacturer’s Suggested Retail Price (MSRP) Model in Europe," Agriculture, MDPI, vol. 14(3), pages 1-21, February.
    2. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2023. "A New Method and Model for the Estimation of Residual Value of Agricultural Tractors," Agriculture, MDPI, vol. 13(2), pages 1-20, February.
    3. Dumler, Troy J. & Burton, Robert O., Jr. & Kastens, Terry L., 2000. "Use Of Alternative Depreciation Methods To Estimate Farm Tractor Values," 2000 Annual meeting, July 30-August 2, Tampa, FL 21800, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2023. "Agricultural Combine Remaining Value Forecasting Methodology and Model (and Derived Tool)," Agriculture, MDPI, vol. 13(4), pages 1-15, April.
    5. Luis Ruiz-Garcia & Patricia Sanchez-Guerrero, 2022. "A Decision Support Tool for Buying Farm Tractors, Based on Predictive Analytics," Agriculture, MDPI, vol. 12(3), pages 1-26, February.
    6. Tozer, Peter R., 2005. "Depreciation Rates for Australian Tractors and Headers - Is Machinery Depreciation a Fixed or Variable Cost?," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137951, Australian Agricultural and Resource Economics Society.
    7. Troy J. Dumler & Robert O. Burton & Terry L. Kastens, 2003. "Predicting Farm Tractor Values through Alternative Depreciation Methods," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(2), pages 506-522.
    8. Beaton, Aaron J. & Dhuyvetter, Kevin C. & Kastens, Terry L. & Williams, Jeffery R., 2005. "Per Unit Costs to Own and Operate Farm Machinery," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(1), pages 1-14, April.
    9. Unknown, 1998. "References/Literature Cited," Commodity Costs and Returns Estimation Handbook,, Iowa State University.
    10. Dumler, Troy J. & Burton, Robert O., Jr. & Kastens, Terry L., 1998. "Implications Of Alternative Farm Tractor Depreciation Methods," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20913, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Daninger, Nathan & Gunderson, Michael A., 2017. "The Pricing and Depreciation Patterns of Used Tractors," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258282, Agricultural and Applied Economics Association.
    12. M. Shahe Emran & Dilip Mookherjee & Forhad Shilpi & M. Helal Uddin, 2021. "Credit Rationing and Pass-Through in Supply Chains: Theory and Evidence from Bangladesh," American Economic Journal: Applied Economics, American Economic Association, vol. 13(3), pages 202-236, July.
    13. Luong, Phat V. & Xu, Xiaowei, 2020. "Pass-through of commodity price shocks in distribution channels with risk-averse agents," International Journal of Production Economics, Elsevier, vol. 226(C).
    14. Emi Nakamura & Jón Steinsson, 2013. "Price Rigidity: Microeconomic Evidence and Macroeconomic Implications," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 133-163, May.
    15. Ray, Sourav & Snir, Avichai & Levy, Daniel, 2023. "Retail Pricing Format and Rigidity of Regular Prices," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1-1.
    16. Lloyd, Tim A. & Morgan, C. Wyn & McCorriston, Steve & Zgovu, Evious, 2011. "Do Sales Matter? Evidence from UK Food Retailing," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108774, Agricultural Economics Society.
    17. Etienne Gagnon & David López-Salido, 2020. "Small Price Responses to Large Demand Shocks," Journal of the European Economic Association, European Economic Association, vol. 18(2), pages 792-828.
    18. Chakraborty, Ratula & Dobson, Paul W. & Seaton, Jonathan S. & Waterson, Michael, 2015. "Pricing in inflationary times: The penny drops," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 71-86.
    19. Hakan Yilmazkuday, 2024. "Pass-Through of Shocks into Different U.S. Prices," Working Papers 2401, Florida International University, Department of Economics.
    20. Klenow, Peter J. & Malin, Benjamin A., 2010. "Microeconomic Evidence on Price-Setting," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 6, pages 231-284, Elsevier.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jagris:v:13:y:2023:i:10:p:2002-:d:1260222. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.