The parts and service business is the lifeblood of every farm equipment dealership. With new equipment unit sales expected to lag at least through the end of 2025, a laser-focused parts and service business will never be more important to your operation.
“Although these current times will also pass, I recommend you actively pursue growing absorption of your parts and service departments and lowering interest expense by using the declining values of used equipment as a marketing tool,” says Bob Hoeg, founding member of the Machinery Advisors Consortium. “Remember, your customers have the same issues as you. Providing them a better value as you face these challenges will lead into a brighter future, while gaining greater customer loyalty and customer satisfaction.”
While different OEMs will calculate absorption differently, the general formula followed is (Parts GP + Service GP) / Total Expenses.
Industry veteran George Keen of Wise Wolf Consulting notes that different industries have different absorption numbers and different opportunities. Keen notes that according to industry data, many car dealerships average only around 70% absorption. “Remember, automotive and equipment dealerships are different, but conceptually similar,” he says. “In the farm and heavy equipment world, experts often say 85% is a solid target, and the best dealers push for 100% or more.”
Keen adds in dealerships that exceed 100% absorption the aftermarket business not only covers all costs but generates surplus profit. Where’s the line between poor, decent and excellent absorption? Keen says, “Generally, below 50% is considered poor (red flag — too reliant on equipment sales), around 70% is decent and above 85% is excellent. One consulting firm calls 100–120% ‘model absorption’ for equipment dealers. Each dealership might have unique factors, but these numbers give a sense of where to aim.”
The 2025 Dealership Minds Summit — The Fully Absorbed Dealer — was made possible with the support of these title sponsors: AgDirect, Machinery Scope, DIS, AXON, TractorHouse, VitalEdge Technologies, Basic Software, Associated Equipment Distributors, AgGuard, Geringhoff, Modern, Yetter Farm Equipment, Warranty Consulting Services and Surmount.
The 12th Annual Dealership Minds Summit will be held on Aug. 4-5, 2026, in Springfield, Ill., with Basic Software, AgDirect and Warranty Consulting Services already committed to return as a Title Sponsor and continue their support of this industry leading event.
More on Parts and Service Absorption
Increasing Absorption Rate & Attracting Repeat Business
Journey to Successful Absorption Rate Looks Different for Every Dealership
Centralized Support: United Ag & Turf’s Smarter Service
The 30-Point Jump: How Salem Farm Supply Transformed Absorption
