European agricultural machinery and tractor manufacturers are currently operating in a difficult market environment. “We are traveling to Hanover in an economically tense and politically volatile situation. However, we hope to see sales pick up again in the medium term,” says Dr. Tobias Ehrhard, Managing Director of the VDMA Agricultural Machinery Association, at the pre-press conference for Agritechnica, the world's largest agricultural machinery trade fair. The industrial trade fair will take place in Hanover from November 9 to 15.
Sales situation still unsatisfactory
“Although order intake rose noticeably in numerous product segments in the first half of 2025, the sales situation remains unsatisfactory,” emphasizes Ehrhard. The industry-wide business climate index, which is based on a monthly survey of top managers in European industry, paints a similar picture. “An upturn has been expected for some time, but it is not really materializing at the moment,” says Ehrhard, explaining the continuing stagnation in the industry.
Cyclical business
Looking back on the past six months, the effects of the downturn that began across the board in 2023 are still visible. While manufacturers producing in Germany still had to record a 28 percent decline in sales in 2024, this decline melted away to around 10 percent from January to June 2025. Almost all product segments are affected by the market decline.
Technology used along the milk processing chain is currently performing particularly well: milking, cooling, and feeding technology recently showed above-average performance on the market. In most other segments, business continues to stagnate. "The situation remains challenging in many places, but our industry is structurally and financially solid. After all, the industry achieved record growth before the recent downturn. Since the agricultural machinery business traditionally operates in cycles, the industry can also cope with this situation," explains the association's managing director.
In view of aging machine fleets, agricultural machinery manufacturers expect demand for modern technology to rise again in the medium term. “We are confident that the agricultural machinery markets will normalize sooner or later,” emphasizes Ehrhard. As soon as the economic engine really gets going again, a solid upturn is likely.
Massively affected by US import tariffs
Until then, one particularly unpredictable factor of uncertainty remains: the US government's tariff policy. “The US government's import tariffs are a major burden for European agricultural machinery and tractor manufacturers. After all, our industry is one of the top exporters to the US,” explains Ehrhard.
In July, following talks with the European Union, the Trump administration imposed a 15 percent import tariff on imported goods. The situation is further exacerbated by an increased tariff on steel and aluminum products that was introduced on August 18. Since then, the steel and aluminum content of a machine has been subject to a 50 percent tariff. In concrete terms, this means that the previous flat-rate 15 percent rule has effectively been abolished. “Now, the steel and aluminum content of all machines must be recorded and customs duties must be paid accordingly. The basis for assessment is the purchase price of the raw material – a huge bureaucratic and cost factor, but above all an unprecedented distortion of competition,” summarizes Tobias Ehrhard.
Open markets instead of protectionism
In addition, compared to other branches of mechanical and plant engineering, the agricultural machinery industry is particularly hard hit by this protective measure. “While the increased tariff rate in mechanical engineering affects an average of 30 percent of EU export volume, in agricultural machinery it is 70 percent on average,” explains Dr. Ehrhard. The VDMA's position on trade policy is clear: “We must move away from protectionism and toward open markets as quickly as possible. Where multilateral free trade agreements are not feasible, bilateral agreements must be concluded, as in the case of Mercosur,” summarizes the industry expert.
Internationally sought-after enabler
The agricultural machinery industry plays a key role in productivity and growth in global agriculture. Machines, equipment, and associated software systems “Made in Europe” are used in more than 130 markets around the world. However, given the continuing growth of the world's population, good-quality food and feed are still not the norm everywhere. There are many limiting factors: weather and climate influences, but also urbanization and geopolitical decisions affect crop cultivation in many regions of the world. “It is clear that we must learn to deal with limited and increasingly scarce soil resources. Innovative, powerful, and highly precise technology is an essential enabler for this,” says Tobias Ehrhard. As a forum for modern agricultural machinery, Agritechnica makes an important contribution to bringing innovation trends to the attention of the global industry.
Combining power, efficiency, and sustainability
In November, the focus in Hanover will be on technologies that combine power, efficiency, and sustainability. “These include numerous new and further developments in mechanics and hydraulics, which demonstrate the continuing innovative capacity of engineering, even in traditional mechanical engineering. Linked to this are digitization, automation, and autonomization solutions that aim to increase process efficiency and intelligence in the long term,” explains Ehrhard. The high-precision agricultural processes that go hand in hand with this also ensure that resources are conserved. “This is a win-win situation, both economically and ecologically – and for the user, too.”
Minimizing CO2 emissions from the operation of agricultural machinery and tractors is another goal for agricultural machinery manufacturers. “Climate-friendly alternatives to diesel fuel are at the top of the agenda. After all, combustion engines will remain indispensable for powerful tractors and harvesters for the foreseeable future,” says Ehrhard. If you want to create effective incentives, you have to make synthetic or biogenic fuels, such as HVO, attractive for use in agricultural machinery.
Innovation needs reasonable framework conditions
For an industry that is constantly innovating, however, the framework and site conditions must also be attractive. Regardless of the segment and the technology. “The agricultural machinery industry can only successfully establish innovations on the market if the appropriate economic policy conditions are in place. Long-term investment incentives form an important basis for this: this starts with tax incentives in the form of favorable depreciation options and extends to measures that combat the shortage of skilled workers. At the same time, we need adequate framework conditions for farmers. Only then will tomorrow's agribusiness become a model of success,” summarizes Dr. Ehrhard.
