This is a growing list of industry terminology relevant to farm equipment dealers and manufacturers. If you have suggestions for items you think should be added to the list, please send an email to with your suggestion.

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Industry Terms
Absorption Rate 1   Total gross profit margin from parts, labor and rent-to-rent business divided by total dealership expenses. [Source]
Aftermarket   Sales of parts and service. Parts manufacturered by a company other than the OEM
Conquest Sale (Color Conversion)   Making a sale to a new customer who previously/traditionally bought from a different brand/color only
Dealer   Generally a retail business that sells goods (and provides related services) purchased at wholesale from a manufacturer or wholesale distributor. A dealership is really a method of product distribution for a manufacturer.
Dealer Business System   Management software used in a dealership to manage finances, sales, marketing, etc.
Direct Sales   Equipment sold to the farmer from the manufacturer.
Fill Rate 2   Rate at which a customer leaves the dealership with the parts or products they wanted. [Source]
Floorplan 3   A form of financing retail inventory [Source]
Gross Margin 4   Calculated by subtracting the cost of sales from the actual sales dollars. Gross margin percent is calculated by dividing the gross margin dollars by sales dollars. [Source]
Inventory Turns 5   Inventory turnover is the number of times a dealership sells through its inventory in a year.

How it’s calculated: Cost of sales for last 12 months divided by the average inventory for last 12 months. [Source]
Leverage 1   Measures how well the business is capitalized and the relationship of internal vs. external financing that's support the assets of the company. Financial Leverage (assets diveded by equity) and debt-to equity (liabilities divided by equity) [Source]
Mainlines (or Major Line)   Farm equipment manufacturers that offer a full line of equipment, including high horsepower tractors and combines (e.g., John Deere, Case IH, New Holland, AGCO, etc.)
Market Share   Percentage of a market's sales earned by a dealership in a specified sale territory vs. other dealers in that same territory.
Parts Productivity Ratio   Parts salaries & commissions divided by parts department gross margin
Precision Farming   Advanced technology to improve the accuracy and efficiency of farming, such as GPS, autosteer, variable rate, etc.
Purity (expressed as Dealer Purity, Brand Purity, etc.) 6   Carrying only the branded products offered by a dealership's major line [Source]
Return on Assets   Net income before taxes divided by average assets
Return on Equity 3   The amount of net income returned as a percentage of shareholder's equity. Measures profitibility by revealing how much profit a company generates with the money shareholders have invested [Source]
Sales Productivity Ratio   Sales salaries & commissions divided by sales department gross margin
Share of Wallet 7   The amount or percentage of a customer's total business a dealership earns. “Are you only chasing market share on combines, or the smaller tractors and livestock equipment too? Are you really going out to that farm and getting every darn dollar that that customer can spend?" [Source]
Shortline   Specialty equipment that is not part of a full line or major line brand of equipment (see "Mainline" above)
Two-Step Distribution   A scenario where local or regional distributors purchase equipment from manufacturers and then sell it to dealers, who then sell it to the end-user.
Wholesale   The sale of equipment to retailers/detailers to sell to the public/end user

Technology Terms
Tractors, compact   Less than 40 horsepower tractors
Tractors, utility   40-99 horsepower tractors
Tractors, high-horsepower   100+ horsepower tractors
Air Drill   Implement used to plant seeds using air to move the seeds from the hopper to the coulters
Auto Steer   Steering systems that use GPS or other technologies to guide tractors and other self-propelled equipment through farm fields and allows the vehicle to follow the same course, time after time.
Compact Disc 8   Used to size crop residue and mix it with soil to speed up decomposition, levels soil and prepares it for seeding. Also effective for incorporating fertilizer. Gets its name from the size of the implement vs. traditional discs. [Source]
Forage Harvester   Self-propelled implement used to harvest forage (hay and other grasses) to produce silage as feed for livestock. Also called a chopper
GPS 9   Global Positioning System that uses 3 satellite signals to get a triangulated read on a user's location. Used for guidance in precision farming [Source]
Grinder-Mixer   Implement used for grinding and blending feed for livestock
Guidance 10   Precision technology used to keep a vehicle or implement on a specified course that can be repeated season after season. [Source]
ISOBUS 11   A concept that allows farmers who are using precision technology equipment to connect any brand of tractor to any implement without losing functionality and/or performance. [Source]
Mower Conditioner   Implement that mows/cuts hay and also crimps and crushes it to promote faster drying
Planter   Implement pulled behind a tractor attached by either a draw bar or three point hitch used to plant seeds in rows
PTO (Power Take Off)   A method of transfering power from a running engine to an implement via a shaft (or drive shaft), thus powering the operation of the implement.
Row Cleaner   Planter attachment used to clear residue, warm soil and smooth the area while seeding. 
RTK 12   Real-time kinematicsis a satalite navigation technique used with some GPS and precision farming equipment. Adjusts the signal to account for the curvature of the earth. RTK runs on the bandwidth of a cell phone, and uses cell towers to transmit data, resulting in a 5-fold increase in coverage and no line-of-sight requirement. [Source]
Skid Steer Loader   Typically smaller 4 wheel vehicle that has lift arms that raise and lower various attachments to perform a wide range of operations (digging, hauling, moving, etc.). Often used in construction and dairy & livestock operations. 
Strip-Tillage   A conservation tillage method in which only strips of a field are tilled where seed is placed, leaving some residue on the surface but also allowing a cleared space for the seedbed
Tedder 13   Implement used to spread hay to expedite its dry down [Source]
Tier IV   Engines with advanced emission control technology required by EPA standards. Final stage of emission standards
Variable Rate   Adjusting seeding/fertilizer rates across different zones of a field to achieve the best return for each area of the field by minimimizing the use of inputs (seed, fertilizer, etc.).
Vertical Tillage 14   Tillage that does not move the soil from side to side and therefore does not  create a horizontal soil layer. Often used to speed decomposition of crop residue in the field and prepare soil for planting. [Source]

  1. "Planning for Profits: The Link Between Sales & Absorption," October/November 2011, Farm Equipment, George Russell and George Keen
  2. "Getting a Handle on Your Parts Organization" February 2015, Farm Equipment, Dave Kanicki
  4. "Business of Selling: Sales Metrics to Monitor (Part 4)," March 2014, Farm Equipment,  Jim Weber
  5. "The Balance Sheet, Leverage & Turnover: Birkey's Training Primer," April/May 2015, Farm Equipment, Mike Hedge
  6. "The Evolution of Brand Purity in U.S. Farm Equipment Dealerships," Farm Equipment White Paper, Charles R. Glass
  7. "Easy to Find Benchmarks," March 2015, Farm Equipment, Mike Lessiter
  8. "Are Compact Discs the Next Wave in Tillage?" March 2011, Farm Equipment, Dave Kanicki
  9. "Colorado at Center of New Global Position Technology: GPS III," May 26, 2013, Precision Farming Dealer
  10. "Technology: Accuracy and Payback Guide Implement Steering Market," June 2013, Precision Farming Dealer, Jack Zemlicka 
  11. "ISOBUS Shows Promise, But Still Far From Perfect," February 2013, Precision Farming Dealer, Jack Zemlicka
  12. "New Technology Driving Growth in Sprayer Sales," July/August 2010, Farm Equipment, Jennifer Reibel
  13. HayExpo 2011 in Review: Farmers Are Relearning the Art of Tedding," July/August 2011, Farm Equipment, Dave Kanicki 
  14. "What is Vertical Tillage Anyway?" March 2014, Farm Equipment, Dave Kanicki