Value of ProDrive vs. 3 Speed Transmissions in Combines8/24/2020
Earlier this year I was working on a combine with a friend and farmer, Dustin, in northern Iowa whose S670 is getting up there in years. He knows his equipment better than anyone I know, and he was still debating over whether to continue to repair the harvester, trade it in for different used model, or buy a brand new one. With so many options, many farmers hit ‘decision fatigue’. One of his unknowns was the transmission. “Is a ProDrive worth the investment?”. If you Google that question, you will find yourself swirling down countless message boards with passionate, opposing opinions. Eric in western New York says it is a no-brainer. “ProDrive is a must have”. Two comments later a farmer in southern Illinois swears his next combine won’t have it and he’ll be returning to a 3-speed transmission. We decided to put this question to the analytical test and determine how much residual value farmers saw in a ProDrive. I must admit that these results surprised me, and just when one question was answered, a whole new one popped up. (If you are unaware of what a ProDrive is, it is an option that enables the combine to control and maintain speed and production without the need to stop and shift between transmission gears as you encounter different terrain.)
There are a great number of reasons why a farmer may personally want, or not want, a ProDrive transmission. Smoother transition of speeds, different handling of hills and terraces, faster open-field and road speeds... being as objective and accurate as possible was a goal of this analysis. This is difficult to do when these harvesters come with so many options. We analyzed auction sale values of John Deere S670s and the percent premium that models with a ProDrive brought at auction, compared to those with a 3-speed transmission. Since separator (sep) hours are one of the biggest determinants of a combine’s resale value, we took this into consideration and looked to see if that “ProDrive Premium” changed as the combine aged and those sep hours grew.
Dustin was also contemplating buying new, so I needed that reference point for a ProDrive on a new S670. Though not exactly the newest model, we needed consistency for this analysis. By calling dealers we found that a new 2015 S670 sold for $421K, with the ProDrive option being an extra $6,900. Approximately 1.5% - 2% of the sale price. Many of the message boards from 2015 reported this transmission costing up to $20K. If this were the case, it would be almost 5% of the sale price. An important figure that we will revisit later. Tractor Zoom has built-up a vast database of over 80,000 pieces of equipment. The S670 has seen over 100 sales in the last 2 years, which is a great amount to analyze. It is a numbers game and the bigger the data set, the more confident we can be in our results.
Separator hours typically have a large effect on combine values. We accounted for this by measuring the curve that combine values fall on as these separators age. Below is a sample of the auction price of all the S670’s on the y-axis graphed at their respective sep hours on the x-axis.
The table below breaks down the values even more into three scenarios of combines with 600, 1200, and 1800 hours. The first row shows the expected value for S670s with ProDrives. The second row is the expected value of a S670 with a 3-speed transmission. The bottom ‘ProDrive Premium’ percentage is the amount that could be attributed to the ProDrive for that age of combine.
The results for the newer combine seem to affirm what the ProDrive advocates have been preaching. A ProDrive in our dataset with 600 separator hours would sell for about $185K at auction. Its 3-speed counterpart, just $163K. A difference of $21K and 13% premium is greater than even the new higher-priced option cost and percentage I found earlier! This indicates that those seeking combines at auctions do value this newer transmission type, if there is some life left in them.
As the combine ages, so does excitement for the ProDrive. So much that it is essentially negligible at 1800 hours. A likely explanation is the cost to repair a ProDrive. $7,000 by some estimates. Older machines are simply more likely to need that repair.
As one final check on this pro-ProDrive conclusion, I find it is always important to filter down by auction type. Retirement auctions tend to bring higher premiums. Consignment sales tend to be lower and represent the market value floor. The unexpected challenge I discovered was that few S670 3-speed combines hit the retirement market. Conversely, very few of these ProDrive models are sold at consignment as seen in the pie chart above. This discrepancy is significant, but the cause is not as clear. Not yet. At least I can now tell Dustin to check out those retirement auctions for a combine with a ProDrive.