You would be hard pressed to find a farm equipment dealer these days who does-n’t have his hands full dealing with the normal, day-to-day challenges of running a successful business. But the unique issues confronting many dealers today can go beyond the straight-forward demands of increasingly keen competition and making some money.
Ag dealers today find themselves in an odd situation. Despite being the biggest “customers” of the “Big Four” farm machinery makers — AGCO, Case IH, John Deere and New Holland — many dealerships find they are also at their whim. As the “Big Four” study their long-term strategies for product distribution, their plans don’t necessarily call for a dealer on every corner of every farm town. With this new thinking about effective product distribution, some dealers are left wondering where their futures lie.
When Farm Equipment conduct-ed its 1st Annual Dealer Business Trends Survey this past fall, more than 340 dealers from the U.S. and Canada responded. In addition to identifying the major business trends in the ag equipment industry today, the survey was also designed to focus on the significant “concerns” of North American dealers.
Not surprisingly, the rising cost of energy and health care insurance headed the list. This was followed by the shortage of skilled technicians and the shrinking farm customer base.
Also high on the industry’s “Issues and Concerns for 2006” were direct manufacturer-dealer issues, including:
- Dealership “Purity” Efforts: pressure from the major manufacturers for dealers to carry only implements and other equipment produced by the major.
- Industry Consolidation: reduction in the number of dealers to streamline distribution channels.
- Succession Policies: contract approvals by the manufacturers— all of whom wish to reduce their total dealer numbers —making it difficult or impossible to transfer ownership of a dealer-ship to family members or other interested parties.
To get a better handle on the positions of each of the “Big Four” full-line farm equipment manufacturers, the editors of Farm Equipment met individually with top executives responsible for dealer networks from AGCO, Case IH, John Deere and New Holland to discuss these dealer concerns.
None would offer a specific number of dealer operations that they are aiming for, but all acknowledge that the overall number of dealers will be diminished over time.
The majors also make no secret of their desire for their dealers to carry most, if not the complete line, of equipment they manufacture. All would prefer that their dealers not carry “too much” in the way of shortline equipment, nor spend their time, effort and financial resources on equipment outside their color.
On the subject of succession planning and policies, the consensus seems to be that in many cases, an honest and open dialogue between manufacturers and dealer-ships can allay many of the fears that dealers have regarding the fair transfer of their franchise licenses.
The following “Special Report” was put together to give Farm Equipment readers the manufacturer’s perspective on these and other issues con-fronting ag machinery dealers.