Some dealers are telling Ag Equipment Intelligence that they're having some difficulty realizing the full price for new Tier 4 Final equipment.
According to one dealer we spoke with, "When Tier 4 Interim was introduced, most of our products came with SCR technology, which was well accepted by customers because they saw improvements in fuel economy of about 6%. When you think about the diesel fuel some of those tractors and combines go through in a day, that's a big savings. The price increase for significant fuel savings was a good trade off."
He says the challenge of the price increase is compounded because of the changing economics of farming. "Last year and the year before we saw some really strong commodity prices and there was a pretty tight supply of new equipment, so it was a little easier to pass those higher costs through. As we see a little more tightening of the economy and customers being more selective in their purchase decisions, it becomes more difficult to pass that on and get full price realization."
For the farm customer, the dealer says, the Tier 4 Final engines created minimum additional value over Tier 4 Interim. "What you're seeing is more complexity, bigger mufflers, bigger radiators to dissipate heat with basically the same fuel economy as with Tier 4 Interim. It's just one of these government mandated costs that have to be absorbed some place, and it's an industry-wide issue."