Martha Hennigan, director of sales operations and marketing at Solectrac in Windsor, Calif., shared a perspective on the impact of tighter emissions standards from her days on the diesel tractor side. The behaviors leading up to Tier 4 Final standards on diesel engines in 2014 correlate with what is currently happening in California with its non- emissions standards for smaller equipment.
Before joining Solectrac, Hennigan worked for CNH Industrial and Kubota. She recalls what happened in 2013 as the market heard, “Here comes a 25% price increase on the new machines, and we’re 1 year away.” The result was a mad dash to purchase the less expensive units before the new regulations took effect.
Fast forward to today, and she notes that the California law requiring non-emissions for handhelds and operating equipment up to the zero-turn mower range “already has landscapers stockpiling like crazy.
“Some of the demand was already there because of noise ordinances,” she says, noting that the vast majority of buyers already accepted the handheld equipment.
In March 2022, Ag Equipment Intelligence asked California dealers how many “advance sales” (sales coming faster than normal buying behaviors) they expected to see in their AOR in the next 2 years as landscape contractors, municipalities and residential buyers try to beat the large expenses of new equipment that complies with the new regulations. About 22% of dealers who responded to the survey predict a 71% increase or more in zero-turn sales, another 22% estimate a 50-70% change, about 44% predict less than 50% change, and the remaining 11% anticipate little to no change.
About 44% of the group thought it would see a 31-50% increase in advance sales of lawn/garden tractors, making it the most common estimate.
The presence of regulatory situations like California’s may bring near-term sales opportunities, but they are disruptive for both the manufacturer and dealer, Hennigan says.
“Every equipment supplier tried to balance and produce as many Tier 3 units as they could before 2014, when shipments needed to be entirely compliant to Tier 4.
“Some manufacturers did better than others at controlling the production and supply,” she says, noting that allocations caused difficult conversations with dealers who had already purchased units.
In addition to the allocations, threats of fines and extensive paperwork, there was the matter of dealers who didn’t want to transfer inventory of their pre-Tier 4 units.
“It was a real fun time,” Hennigan says.
She adds that dealers attempting to sell into California, where restrictions first took place, faced tremendous fines, and manufacturers could be implicated as well. The dealers surveyed by Ag Equipment Intelligence were asked to rank their level of concern about 4 issues related to the changes coming in California.
Nearly 56% of dealers ranked record keeping and legal issues as their most concerning issue. The ability to obtain product over the next 18 months was the second most-concerning issue, followed by higher pricing of compliant equipment. Dealers, on average, felt neutral about loopholes providing advantages to other sales channels.
Hennigan sees what is happening in California as a signal that the threshold will soon be raised above ZTRs to apply to compact and subcompact tractors. When asked to venture a guess when that might happen, she predicted it would happen before 2027, done either through incentive or legislation.
Another factor that will influence electric-powered sales, she notes, is that Tier 5 diesel engine standards are in the offing as well (projected for 2028-2030). Thus, legislation — as much as market demand — is expected to positively influence electric-powered equipment, she says.
A dealer who responded to the survey has already seen how consumers are reacting to the prospect of electric equipment, noting a Canadian neighbor got an electric walk-behind lawn mower and loves the lighter, quieter, cleaner and easier to maintain machine.
“Rural lifestyle dealers better get positive with these tools as the market will drive their sales,” the dealer says. “I expect our whole neighborhood to be electric in 5 years.”
Hennigan doesn’t expect Tier 5 standards to bring the dramatic change in technologies that caused the 25% price increase that came with the Tier 4 standards, but she says that Tier 5’s presence will further alert buyers to the advantages of electric farm machinery.
“Battery technology will be advancing at the same time that diesel prices will be going up,” she says. “The changes in pricing will benefit the electric-powered units.”