Some manufacturers are ready to go further into their margins to help dealers successfully sell product in this challenging time. If asked by your suppliers for input on how to make 100% of that investment count for your business, how specifically would you ask them to direct such a program?
“We like the flexibility to use it to tailor the best package for the individual customer. Each customer has different needs to best fit their business. In our opinion, the manufacturer funds would be best used for one or two of the following:
- Interest waiver package
- Extended warranty
- Tailored finance package
- Extended term
- Balloon payment
- Lower the purchase price of the unit
“I know we have the ability to do these anyway, but to have additional funds to use and let the customer know the company understands the time of uncertainty we are in and wants to help by designing a purchase with less risk. We all know our business is cyclical and this is another bump in the road, but we need to look at the long term picture and keeping their buying cycle on track is important.” — Les Olson, Plains Ag, Williston, N.D.
“I would ask them to be more creative than just offering discounts. I think they could do some things like applying those funds to the first payment or do an interest waiver (not low rate). These would help with cashflow for the next 6-24 months until corn/soybean/livestock prices recover.” — Jeremy Ostrander, AgriVision Equipment, Pacific Junction, Iowa
“Our small tractor business has been very slow for the last couple of months. Our main line is Yanmar. A couple of things that they could do for us is to increase their advertising and to increase their share of the co-op advertising to help increase inquiries. Also, they could come up with true 0% or very low interest finance plans to help stimulate some demand. If this fails to stimulate business, it will become necessary to lengthen interest free floorplans or lose a lot of dealers.” — Sandy Kimball, K&S Tractor Sales, Lubbock, Texas
“I would ask for term extensions, which Kubota has done already and is very greatly appreciated. It’s hard to put a dollar amount on how much additional discount it will take to move units in this very unusual time. I think on the larger dollar units it will need to be discretionary on each deal by your ASM determining the amount.” — Tom Kesteloot, Kestelloot Enterprises, Marshall, Minn.
“OEM programs need to target interest bearing equipment in a big way. Retailing that equipment is the only way to rid dealers of the interest burden that is killing them. Large discounts and help putting dealers together to transfer would be a good program. Extending curtailments, etc., are appreciated but really don’t solve the problem they just put off the inevitable.” —Don Sweitzer, Owens & Sweitzer (1972), Eston, Sask.
“Toward more financing options like 0% for an extended amount of time on both new and used equipment. Offer something similar to what the auto manufacturers have been advertising, like 0% for 84 months with delayed payments. In these times, aggressive finance options seem to be the trigger.” — Scott Grundstad, Plains Ag, Spearfish, S.D.
“100% on helping dealers stay viable to ‘keep the flag waving and service support intact’ such as new and used financing assistance, SOM relief and postponing any building upgrades, but only with demonstrated good dealer management, so as not to ‘game the system.’ Some well managed dealers are likely to encounter headwinds that could put them under stress for customer support. Those that haven’t been well managed up unto this event should not be rewarded.
“Nothing for customer discounts as that normally gives away needed margin to those customers who are able and willing to buy now, or pulls ahead from the near term future to ‘capture the deal.’ creating a future hole.” — Bill Schmidtgall, Koenig Equipment, Morton, Ill.
“Discounts are important, but due to the shutdowns, customers are very apprehensive on purchases. We have gone through a period of lower commodity prices, livestock included, which has caused many dealers to have aged inventory accruing interest. This is a bigger issue in itself, interest payments are not recoverable and have been huge for most dealers this past year. Dropping half the interest would be a good start. We all need to sell the product, but as the old saying goes, ‘You can lead a horse to the water but you can't make it drink.’ Farmers are very negative on larger purchases currently and in the past couple of years, exceptions do occur though, but they aren't the norm.” — Morris Drummond, Drummonds Farm Services, Holland, Man.
“Here are a couple ideas I’d like to see. A retail incentive to lower the price of equipment. A deferred first payment if 25% equity on retail note. Purchase an item now, and get an additional future rebate on another purchase. Interest rates are very low now, so I think it needs to be something to create a sense of urgency to buy now, and getting a ‘Deal.’” — Jeremy Knuth, Vice President, Sales, Heritage Tractor
“We have had no luck with New Holland participating in the cash crop market for a few years. They have abandoned their cash crop dealers, the brand has not shown the dealers they want to be in the cash crop business. You have to be engaged into the market before you know exactly what is needed to close any one particular deal. Our sales staff has shut down quoting this equipment to our loyal customers due to the fact we know we will not be competitively priced with the other brands. Other shortline brands have been stepping up and our sales year-to-date have been above our expectations with everything going on. However we think this is short lived if the grain and livestock market do not rebound soon.” — Lance Carlson, Quincy Tractor, Quincy Ill.
“If I were to give you a simple answer from my personal perspective, I feel that without money going to support the sale of used equipment all that selling more new will do is add to the cashflow problems that we have already seen in the past few years with the abundance of used equipment now compounded by the extra costs and reduction in business due to the COVID-19 virus. Selling new without any guarantees of delivery is also a bad idea, often the trades may be sold only to find out that the manufacturer or their suppliers somewhere in the world have had to shut down production due to the COVID-19 virus leaving the dealer to have to figure out how that customer can be managed — often at the dealer’s expense.
“Having been in this business way too long, someone told me early on that we are not in the business of selling new, but rather what we do is buy trades to support new sales for the manufacturer.” — Brent Bazin, Youngs Equipment, Moose Jaw, Sask.
“With the current crisis in the farm markets we need assurance from the manufacturers to hold prices at current levels and help with promotions on products if we are going to continue to sell new products. Better prices always is a game changer. Farmers will buy if they get a good price for their products.” — Ron Bellomy, Legacy Equipment, Paragould, Ark.