Originally published in the January 2007 Farm Equipment SHOWCASE

As was done at the last Agritechnica in 2005, Farm Equipment, scheduled a meeting with Ulrich Beckschulte, director of Germany’s dealer association (H.A.G.) in Essen, to compare notes on the farm equipment dealer landscape.

Industry Makeup. According to Beckschulte, Germany (which is roughly the size of the state of Wisconsin) has about 3,900 service firms. However, In Germany there are about 800 “A” dealers (dealers with a prominent major tractor line, similar to the North American model) with the balance being “B” (smaller sub-dealers) operations. The “B” dealers typically have contracts with the larger “A” dealers for the mainline equipment they represent, says Beckschulte. It’s also possible that one dealer might be an “A” dealer for, say, SAME but a “B” dealer for Case, he says.

In terms of mainline representation, Fendt, Massey Ferguson, Valtra, New Holland and John Deere lead the way in sites. (Deere operations tend to be very large, thus their fifth-place position, he points out.)

In U.S. dollars, the average German dealer does about $1.9 million in sales revenue, and has 8.4 employees, far lower figures than American dealers. However, one must remember that the 3,900-operation German industry is fragmented with many small service firms. As an example, while the average employment is 8.4, Beckschulte notes that the average Deere dealership has more than 30 employees.

Market Health. It was clear that the European farm economy is much improved from 2 years ago. “It is absolutely a good time for the industry and the dealers,” says Beckschulte. “The domestic market is good to very good, and nearly everyone is very satisfied. Farmers have money and are reinvesting. Over the last several years, they only looked to maintain the equipment, this year they’re buying new. Milk prices are also higher than ever.”

Used Machinery Markets. Eastern Europe is very important for used machinery, Beckschulte says. “When there’s a trade-in on a tractor, often there is no longer a market for those older units in Germany and Western Europe. Without a market, you have to export it or scrap it. This is why export markets such Poland, Russia, Romania, Hungary, Kazakhstan and Ukraine are attractive to our dealers, and possibly China in the future. There are no dealers in Germany not focused on these opportunities for second-hand machinery.

Beckschulte is proud of a new internet search engine that helps dealers facilitate used equipment transactions. “In the U.S., you use Iron Solutions,” he says. “In Europe, there are many national online databases for used equipment. CLIMMAR (the federation of European dealers associations) created an umbrellas of search engines, with one address to remember that covers used farm equipment for all of Europe – www.go4tractors.eu.” For the dealer, it required no additional work and delivered access to many more buyers than ever before.

The system is a multi-language search engine that consolidates the used machinery offerings with search criteria on machine type, band/manufacturer, year of manufacture, hours and price, along with photos. Customers can contact the dealer and receive a response in their own language.

Beckschulte also pointed out that Agritechnica drew many dealer exhibitors for the first time, solely to promote second-hand equipment to international attendees. In the Used Machinery Trade Center at the show, dealers and other exhibitors, (offering services in transportation, price guides and financial lending) were present so farmers could arrange for all aspect of the deal on-site.

Dealer Purity. Beckschulte was certainly familiar with the term, “dealer purity.” “Yes, they’re trying to do it here, too. Deere is doing it, but they don’t talk about it. At CNH, things are more complicated, with all the turnover. But Deere is efficient and strong. But dealers here in Germany will not accept it, nor will the French.

Beckschulte noted that in France last year, 10 John Deere “A” dealers were cancelled – four by the manufacturer and six who cancelled themselves, instead opting to sell other tractors like Valtra and McCormick. “That was the first time this has happened in that there are 10 holes in the network that are still open today.” Gesturing with his hand, he says, “Our dealers have had the nose full of this”

“Our dealers do not like how they are made to feel by John Deere. They do not feel like a free dealer, but rather as a franchise like a Wal-Mart or McDonald’s. The word “partner’ means something different to John Deere.”

Dealers Brand Together. While Germany’s dealer-manufacturer relations are better than France’s, though still not desirable, something of interest is the fact that dealers selling John Deere, Case New Holland and Massey Ferguson have formed common brand-specific sub-associations of their own. “Members of the base organizations are now also invited to pay to be part of separate associations that are aimed to protect the common mainline dealers. It’s been going on for 5 years now.”

Sounding like a union of dealerships of sorts, Beckschulte noted that these groups meet and discuss all things specific to their brand, including items such as warranty, parts, financing, marketing and, of course, purity.

“These groups are getting stronger, and we believe it should cover all of Europe, not just national interests,” he says. “We want to be more together, can accomplish more together. We don’t have the power to fight inside.”

Talent Problems. Beckschulte noted that the depressed farm economy in recent years led to definite talent shortage. “One issue is availability of talent, second is quality. Dealers aren’t developing their people over the last 10 years. We must have a focus on qualifying chiefs, and workers in all areas. It’s expensive, but we must do it.” 

He also added that lack of service techs is a universal concern that keeps German dealers awake at night, too. “We’re working to promote the profession – not oil, dirt and dust, but rather a career that is high-tech and positive. We invited all schools within 200 km to Agritechnica to see it. It’s a high-tech profession that offers career choices not only in ag, but also garden, construction, sports and bioenergy.”

Bioenergy Opportunities. Beckschulte encourages dealers to find and profit from the opportunity that comes in alternative fuels. “The woods industry is exploding. This is a very interesting chance to gain new equipment markets to service. The leaders in these fields are decentralized, the work is always done in rural areas and on land owned by our customers – farmers. Our dealers offer the wonderful logistics of spare parts, and ours is an industry that will go out to them on a service call on Easter morning – we are best equipped to do the service. There are engines needed for bioenergy production and other types of equipment supporting biomass further up the line. New firms are evolving to service the machines.”

For a nation-by-nation summary of the European farm equipment statistics and contacts, visit www.farm-equipment.com/ff/Europeandealers.