Farm equipment dealers are reporting that they’re feeling growing pressure from their manufacturers to increase their orders for new machinery.
According to the latest dealer sentiments survey conducted by Ag Equipment Intelligence and Cleveland Research Co., overall, new equipment inventories grew slightly higher in December compared with the previous month. A net 39% of dealers report new inventory as “too high” (46% too high; 47% about right; 7% too low) compared to a net 34% a month earlier.
While dealers say that passage of the Section 179 depreciation rule helped move new inventory somewhat, it came way too late to make any real difference. One dealer with a sense of humor put it this way: “[Section] 179 being signed made the last week fun, but not enough to make up the difference from last year. Another week earlier and I’d have considered becoming a democrat.”
As a result, dealers say they’re seeing additional pressure from their manufacturers to place more orders for new machinery. Comments included: “New Holland is pushing us to order more than we wanted to order” … “CNH is already shipping orders at the end of 2014 that were supposed to arrive mid to late 2015!” … “We’ve got no combine orders and even fewer 4WD tractor orders. There’s still too much equipment on hand at the dealer level” … “All manufacturers are pushing for more orders. They are hounding us, playing the old game, stuff the dealer. We are not biting” … “It is just a matter of time before manufacturers get more aggressive with their discounts to keep their plants running.”
Used Slightly Better
Dealers also report that their used inventories improved somewhat in December. A net 37% of dealers reported their used inventories “too high” in December, slightly less than the net 41% from the previous month (49% too high; 39% about right; 12% too low).
- Used Combines: A net 47% reported inventories “too high,” well above the net 38% last month.
- Used HHP Tractors: A net 10% reported inventories “too high,” below the net 18% last month.
- Used Sprayers: A net 28% of dealers reported inventories “too high,” inline with the net 27% last month.
In addition to these, dealers also mentioned round hay balers, corn heads, large planters and air drills. One dealer said, “The larger the unit, the more pressure.”
One dealer who specializes in used equipment wasn’t complaining. “We are buying used and reselling. The first buyer is losing $60,000-$80,000 but it is great for us.”