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

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  • 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
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    References listed on IDEAS

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    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.
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    Cited by:

    1. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2024. "Enhancing Predictive Accuracy in European Agricultural Tractor Residual Value Estimation: A Double Square Root Regression Reappraisal," Agriculture, MDPI, vol. 14(5), pages 1-19, April.
    2. 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.

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