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In this episode of the Farm Equipment podcast is brought to you by SurePoint Ag, Executive Editor Kim Schmidt sits down with Brett Davis CEO of the North American Equipment Dealers Assn.

Brett’s been in the role of CEO since July, and just 3 months into the job is already busy meeting with dealers, manufacturers, other associations and other service providers who work closely with dealers, like finance and software companies.

In our conversation, we cover what these first few months have been like, what he hopes to accomplish as CEO and the challenges he anticipates dealers will face in the evolving ag economy.

               
           

         

               
           

This episode of Farm Equipment Podcast is brought to you by SurePoint Ag.

SurePoint Ag Systems is a leader in ag tech, providing modern solutions for modern growers all around the world. Their fertilizer application systems and sprayer mixing and loading systems helped them grow exponentially in popularity. And today, they’ve expanded both of those product lines and added more solutions for irrigation injection, anhydrous application, and planter technology upgrades. SurePoint Ag’s proprietary technology is compatible with most major brands of equipment, and is well-known for accuracy, reliability, and versatility. Learn more about our popular product lines by visiting www.surepointag.com.

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Full Transcript

Hi, I'm Kim Schmidt, Executive Editor of Farm Equipment. Welcome to Farm Equipment's podcast. In this episode I sat down with Brett Davis, CEO of the North American Equipment Dealers Association.

Brett's been in the role of CEO of since July and just three months into the job is already busy meeting with dealers, manufacturers, other associations, and other service providers who work closely with dealers like finance and software companies. In our conversation, we cover what these first few months have been like, what he hopes to accomplish as CEO, and the challenges he anticipates dealers will face in the evolving ag economy.

This episode of the Farm Equipment podcast is brought to you by SurePoint Ag, providing modern solutions for modern growers. Let's jump into the conversation now with Brett, sharing how the transition into the new position has gone so far.

First off, when did you officially transition into the new role?

July 1st.

Okay. I was going to say I knew you were in it when we saw each other at DMS, but I wasn't sure how new it was at that point, but that was weeks in, right?

Weeks in. That is correct. Yep. Yep. I came over from Kansas City. I drove over to Iowa City from Kansas City.

Okay. So I guess how have these first couple of months been for you in the new gig?

Learning a lot. Exciting to learn a lot more. I mean, I always knew about NAEDA and several other associations kind of thing and I knew some of the mission. There's a lot of details behind that that very few people are aware of what goes on day by day. And that's been the biggest surprise to me, how much day by day interaction we have with dealers is quite amazing, including myself, and I like it. I enjoy it. I love it. It's fun solving problems and it's more than... a lot of times, dealers think, "Oh, it's a legal issue." No, it's not a legal issue, but here, let's figure out the problem and let's try to solve it for you.

We've been reviewing contracts. Every week or two, there's a contract that comes through from the dealer. I've actually had a couple software companies reach out and say, "Hey, would you look at our contract and kind of give it the NAEDA seal of approval?" Well, we don't really give it a seal of approval, but saying that we've reviewed it, we made some modifications, so we just let you know, dealers, it seems relatively fair, but it's your decision if you want to sign it or not or if you had anything else you want to add.

So those software companies, were they reaching out to share their contract that they would send to their dealer customers? Is that what you... okay.

Correct.

Oh, nice.

And they proactively did it, which is so much better because then I don't have to get one in from dealer A, one in from dealer B. So it just makes it a lot easier to do it in one shot. Now, this is a company that's launching. So they wanted to get ahead of it, especially with all the data concerns and the privacy issues that are out there and who owns the data in the system and what can be done with it and how it can be used.

And they were very... I give them a lot of credit. They were very concerned about how their contract would read and be perceived in the public domain. Actually, it was an exceptionally well-written contract and very fair to both the company itself and the dealers. So there was very few modifications, hardly at all. So I was really happy to see that.

And it was funny that they weren't an associate member and they're like, "Could you review this with your lawyers?" And I'm like, "Okay, yeah, we can, but I'm going to have to charge you." And he's like, "Yeah, we know that." And I said, "Look, I hate to tell you this, if you just join as an associate member, we'll do it for free." "Yeah," I said, "If it requires a full rewrite from our attorney, from Lance, we'll probably have to charge you. But if it's just a review and with a couple comments, it's not... no, that you're entitled to that as part of the benefit of being a member."

So did they come on as a member or not yet?

Of course. Why wouldn't they? Yeah, they already signed up. I mean, I said that to him and he's like... because reviewing a contract from... take it to a law firm, they're going to charge you quite a bit and it's a reoccurring benefit too. So I mean, they can use this for if they have questions on this, questions on that. And again, we're happy to say to a dealer, "We have reviewed this contract."

And we feel confident that it will be fair to you and all of that.

Fair to both parties involved. Yeah.

Awesome. So now, you're not quite six months in, I guess, but getting to that. You're a few months in now. What are you hoping to bring to the association and kind of accomplish in your role leading the group now?

Yeah, there's a couple of things that I actually met with the other association leaders, the other national and the regionals. I think two weeks ago, they had an association of the associations and that was great and I got to meet all the different players. I had not known them in the past. I knew one of them in the past, but not the others, no. And one of the things that our board and myself really are very passionate about is building broader coalitions, trying to speak with as much unified voice as possible because we agree on everything, but each one of us is sitting there sending in this or sending in that. And you have to wonder if legislatively, that's the most effective means. Rather, is it better to speak with one voice and one coherent, clear voice? So I do believe that. I think they do as well. We're working... it's going to work hard.

And the other thing was to be a little bit more proactive instead of defensive. As a collective group, I believe we can be a little bit more proactive on legislation that supports dealers and it's fair for everybody else as well. And even looking beyond the dealer world, trying to... we've had discussions with a couple of the OEMs. Do you support this? Most of the things are aligned. They're not... right to repair is generally aligned. What can we do to be more proactive as a group in bringing... whether it's use the OEMs themselves or together with AEM, for example, or other associations.

So really trying to form broader coalitions to try to get these things done because every time it pops up in a state level, boom, it's a panic mode. Everybody goes after it and we're able to usually get that legislation to where it needs to be, but it's one after another, state after state. So perhaps we need to be a little bit more proactive in addressing it and that's some of the things that we're talking about. So that would be one.

Expanding the manufacturer relations is... because we're the only one that really does that hardcore manufacturer relations and it's real. And I've already worked on expanding that [inaudible 00:07:13]. I've already, since in my short tenure, I've already met with three OEMs formally. We have a fourth coming up in a week or so or 10 days. And actually, going down, we used to historically just do the top four or five. Now we're going to drop down and hit a lot of other OEMs as well that we can't go. There's only enough capacity to go so far down.

Right.

But I think it's good to build those relationships. And maybe it's not an annual event. Maybe it's an every two years event. Maybe it's an every year event. But also helping them and also bringing the voice of the dealer to the OEMs and also offering support to those OEMs too. "Look, your contract, let us take a look at it instead of every dealer sitting there marking it up and sending it back to you, which is going to waste your time. Then we can help you get that done if you're willing to be reasonable and fair."

And it's going to help them, probably in the long term, have a better relationship with their dealers, be on the same page a little bit better, be a little more mutually beneficial to both parties.

And also, a lot of them are interested in engaging us for training opportunities through our dealer institute too, which is powerful as well. And then we have the accounting firm led by Kurt that does dealer and the others. There's probably no other firm, at least in the US, that has more inherent knowledge of the inner workings of a dealership and how to do a proper audit of a deal, whether it's reviewed or not than Kurt and his team because that's all they do. They don't do anything else but dealers. So...

All right. How do the various roles you've held in your past feed into what you're doing now with the association and working closely with dealers? How will that all kind of impact your job?

I think that's what attracted me to the job is that at this stage in my life and my career, you have options. You could do nothing. You could do the consulting route. You can do this and I did basically all of that, but it actually wraps together everything that I've touched over for over 30 years. So it's pretty awesome. I mean, I've worked with dealers for 30-some years in different capacities as the OEM. I see the side of the OEM very well, and I see the sides of the dealer very well and kind of marrying all that together is really important.

Now the OEMs, the main OEMs, and we just had this discussion the other day that they're typically not the folks that we need to worry too much about. Whether it's C&H, John Deere, Kubota, AGCO, CLAAS, they follow the standard set of rules that are out there pretty much, whether it's driven by state law or just customary rules for a North American business. And the contracts are fair. Their processes are fair and compliant for the most part with all laws, so that's not the problem.

The problem is there's a lot of second tier manufacturers that haven't invested in that. And I learned this firsthand because I guess I was naive when I was running the dealership out on the West Coast. I didn't have any clue that there were all these short lines and other brands that didn't care about some of the basic fundamentals of being an OEM and having a distribution channel like how they reimburse warranty properly and fairly, what the termination looked like. What do parts returns look like? I mean, I can go on and on with the list.

So I'm really very passionate about that, making sure that everybody complies. And we've actually brought this up with the name, the big OEMs, the big four or five in the ag world, especially, and they're like, "It's actually hurting your dealers while you comply because they're not getting the same treatment that you guys are offering them." And I said, "I'm taking this mantle on this flag up." And I said, "A lot of it is just they're smaller companies. I don't think they're being willful or intentional."

Right.

"I think they don't know what they don't know." And I'm actually throwing out the olive branch and saying, "Hey, let us help you do things the right way." People coming over from Europe or Asia, same thing. They're just not yet comfortable with North American customs or norms and legal too and we can help and I'm willing to help, but I'm here to represent dealers and if the dealers aren't being treated fairly, we're going to make sure they are.

Right. Do the variations in dealer protection laws from state to state, is that part of the problem that a short line can-

It's hard to comply-

... what is different from state to state?

... right. So from my experience, it looks like the main lines, the full lines, they follow usually a least common denominator approach. They don't go state by state, "Oh, I only have to pay you 85 cents on the dollar in California." No, they follow the standard set of guidelines and rules because it would cost them more money and create more bureaucracy and work having to sit there and have a state by state policy. And then you have dealers that cross borders and you have this and that, so there's a whole host of problems, and that's the kind of message I'm delivering to the short riders. You probably want to find the least common denominator there to make it easy for yourself, and we can help you with that because some states, you are correct, do not address these things at all.

And one of the things that is on my agenda, together with the other associations as well, is should we put forth model legislation that is acceptable to everybody for basic dealer protections in the states that have nothing. I'm in favor of that and be honest with them, the main OEMs are as well because they're already doing it, so they would like to see the benefit of what they're doing trickle down to the other OEMs as well. So it'll take years to get this done, but we got to start somewhere. We have to start somewhere and I want to fill in those gaps in probably about 15, 20 states that really don't address the dealer issues.

That'll be interesting to watch how it evolves over the years and how long it truly does end up taking.

It's the government. It's politics and again, it's the same with right to repair. Even as an OEM, I hated right to repair. Now, the ag guys went out and did the MOUs and I think that's been effective pretty much working with the Farm Bureau, again, building a coalition. That was very smart and I think we can build off of those MOUs for all of the off-road industries and bring that together to have a common unified voice on right to repair that everybody agrees to: manufacturers, customers of dealers, and dealers. All of us can live with that.

From where I'm sitting, it seems like at least in the last month or so kind of quieted down on the right to repair front? Am I just not seeing it or are we in kind of a quiet moment?

Summertime low.

Right.

There's a lot of them aren't in session. As they get back into session, there was a couple that popped up recently, but you're right. It gets quiet and then we expect it to ramp up. We try to at least stay abreast of what the noise is in the state. So we're usually not surprised. It's possible it could happen.

Right.

But usually, we know what's going to be put forth on the legislative agenda state by state.

We'll get back to my conversation with Brett Davis in a moment, but first, I wanted to thank our sponsor, SurePoint Ag. SurePoint Ag Systems is a leader in ag tech providing modern solutions for modern growers all around the world. SurePoint Ag's proprietary technology is compatible with most major brands of equipment and is well known for accuracy, reliability, and versatility. Learn more about SurePoint Ag's product lines by visiting www.surepointag.com.

Let's get back to the conversation now with a discussion on what other issues dealers will be facing as we finish out 2025 and get into 2026. We also look farther down the road and talk about how the shift in the ag industry will impact dealers.

We talked right to repair. What are some of the other issues that you kind of see as top of mind for dealers as we finish out 2025, but then also heading into 2026?

Well, you can't have this conversation with tariffs. It's caused a lot of confusion both in the US and Canada. It's caused a lot of concern on the dealers' part, on the customers' part, adding the tariffs on, it's creating a cost problem for a lot of users, end users, so that, I mean, it gets to the point where how much can they justify spending for something at this point and will they get a return value? So there's a lot of concern there. We've got to make sure... and then they need clear rules too to follow. There's been some content messaging out there and that gets really complicated.

I was talking with our dealers about countries like Brazil, which obviously, a very big agricultural country and also both manufacturing environment and dealer environment. So they do have content rules in Brazil, but they've had them for 25, 30 years now and they were confusing, but they've evolved nicely over the 30 years where they actually have a process. So their content rules allow you to get access to things, if you build the stuff in country, and they have all the parts and components are registered and they do audit it, but generally, it's not an issue. Everybody... the rules are very clear now. They were foggy there probably 15, 20, 25 years ago, but they're clear now.

So I think that's what we're going to have to head into some clarity on what these rules are and where. A lot of times, we don't keep records, accurate records of where that widget came from. It could have come from X, Y, or Z in a big pile. We just don't know. So it's causing some concern and confusion. Obviously, the ag market is down, depressed, trying to figure out what levers can we pull to get the ag market starting to get back. It is cyclical, but I've heard, interestingly enough, there's this debate going on as to whether this is just your typical cyclical environment or it is a shift. And I'm not sure if I know. I'm not sure if anybody knows.

I can argue both ways. I could see yes, it's part of the cyclical environment and demand will pick up, but at the same time, I also see this shift because of just the cost of doing business and is that going to shift us into a different direction and how the types of machines that we're going to need or want and use on the farm. I don't know. Is bigger better? I don't know. So there are theories out there that suggest there could be a paradigm shift. I'm not sure I'm ready to declare that yet.

But I get very concerned for dealers absorbing class 10 and class 11 combines, for example, as used equipment that aren't so used, that have 600 hours on them and a machine that could have cost over a million dollars easily initially, what can that be sold to in the secondary market and who is your buyer? Because if I have a farm of 3,000 acres, I don't think I need a Class 10 or 11 combine, but you might need some of those buyers.

So it's interesting to see how everybody's shifted to the flag... is built a lot of flagship stuff and a lot of customers have demanded it and wanted it on the use side. How does that trickle down onto the use side? And I don't know if we know the answer yet because it's still happening as we speak.

Yeah, yeah, and if there's no one to buy those, what happens to them?

Well, there'll be someone to buy it, but at what price point? And then you start to look. If you get 50 cents in the dollar, then the new buyer is going to become disillusioned because they're used to rolling that combine every X years and now they're not and really minimizing their payment on an ongoing [inaudible 00:19:54]. And now, if they only get 50 cents on the dollar on a trade, that payment is going to be substantially higher than they've been used to for a long time.

Yeah. We had a webinar last week and an interesting point was made as it relates to used equipment and the tariffs and how the advice was essentially maybe dealers need to be putting on that new... the invoice for the unit they sold now that has this tariff surcharge essentially on it so that the farmer is not expecting that to be part of their value when they come to trade it in because it was a tax thing and it wasn't really the cost of the equipment itself and it added value to the tractor or combine that they had bought.

Right. It didn't add value. But to a farmer, the cost is the cost, right? I mean, if it added $100,000, he's in it for $100,000 more. So it's almost like sales tax in many states and provinces. Sales tax farmers are exempt from sales tax, not in every state. So are we going to start... that is a line item, but there's the farmer thinking that, "Well, I'm in Iowa. I don't pay sales tax, but if I'm in California, I'm paying." And again, I don't know every state by state rule. I'm paying 7, 8%. That's the cost of the equipment in that state, period. So I don't know. I mean, it sounds noble, but they're going to still want their money back.

Right.

It's still their money. So maybe the government will reimburse them at some point, I don't know, or give them a credit. I don't know.

Yeah, beyond just kind of the obvious that we talked about, issues on the tariff side of things that you guys have heard from dealers specifically in challenges they're running into?

I spent some time up in Canada. I'm heading back and their voice is pretty loud. I mean, there's a lot of concern on the Canadian side especially and again, it's a lot of the back and forth too. Clarity would be helpful and we don't have a lot of tremendous amount of clarity yet. So it seems like it's still a moving target. So it's causing a lot... I mean, it's an existential threat to their business model because they don't have the OEM base that the US has or Europe has where a lot of the machinery coming from. Now, they may have a significant advantage, machinery coming directly from Europe to Canada as opposed to it coming to the US because the way it works, but it's difficult.

What we've been talking to... well, the one thing about the OEMs, I have to give them credit, and we've talked to them about this in our meetings, our manufacturer relations meeting is that they're not just like, "Oh, that product is coming from Europe, so we're just going to add 15% on to it" or whatever the case. They're not doing that. They're rebalancing their portfolios and the pricing in their portfolios and looking at all their products as a product portfolio as the individual product cost and the impact of tariffs on individual products. I think that helps a lot because then you see a rebound. They may add, they may... small tractor may go up 3%, but the combine may link up 2% or something like that where they then can figure it out. It is causing the whole prices to go up, but it's not like, "Oh, the combine's going to go up 15% overnight, one day to the next." It's not happening that way.

Yeah, okay. That's good to hear. And then looking further out than just the last quarter and into next year, so maybe five years, maybe 10 years, how do you see the industry changing and dealers' business changing? That kind of gets to the paradigm shift you were talking about.

Yeah, it does. Well, for one thing, it's clear that consolidation is continuing and there's actually a lot of activity right now in terms of consolidation because people are... the valuations have dropped a little bit for dealers because for a few years of not the best agricultural economy, so dealer valuations have moderated quite a bit. So there's some opportunistic buyers going on now. So I think consolidation will continue. That's not something that's going to go away.

Right.

It'll dissipate because the mission will be accomplished at some point to where they want to get and what they want to do. So I think that's easily the one thing, but that's not a surprise to anybody. That's just ongoing.

Technology continuing to play a part. Of course, it's getting every day, the technology that's available and the adoption are two separate things. The adoption is getting better every day. The technology is out there and being invested in all the time.

Right.

And it's much greater than the adoption rate. The adoption rate will come with time. It's just like anything else. People have to get used to it, comfortable with it, and the adoption rates will come high.

I have mixed feelings about any kind of alternative fuels. Clearly, the farm economy doesn't really, even the construction market doesn't lend itself completely to electrification or anything like that. I mean, common sense tells you no, right? You imagine the size. We already have extremely heavy equipment now. Imagine adding all those batteries on.

Right.

I actually drive an electric truck, which I love, but it's 10,000 pounds. I mean, it's just logical that how much heavier can they get? So I don't see that happening. I like the idea of alternative fuels and the biofuels and things like that, but the infrastructure is clearly not there as well. So we'll see how that plays out. And I think the only way the infrastructure gets there is probably with public money, not private money. It's a big investment.

So autonomous? There's a use case for autonomous, just like there's a use case for everything, even electric, and some small tractors, hobby tractors, perhaps, power tools, things like that. There's probably a use case for autonomous as well in repetitive environments, feed lots, maybe, rote crops. I think could see some more autonomous. I mean, there's some pretty cool projects going on, companies, startups that are investing in certain markets. We're seeing a vineyard tractor being completely autonomous.

So I think in pockets, we're going to see some of that as well. I don't know how widespread it will be. It's like now that a lot of us are starting to use the adaptive cruise control in the vehicle. Five years ago, we didn't. Now, we're all starting to use it. Now, we have superdrive, or whatever they call it, supercruising know where it changes lanes for you. So I think it's a gradual adoption. So I think you'll see more.

All right. And we had started off talking about sort of the rural lifestyle and outdoor power equipment market. NAEDA introduced their OPE council. So how is that... I guess what, in that market, are there different trends you're kind of monitoring? So the electric equipment is going to be a different case there like you had just mentioned. Anything else impacting the dealers differently?

No, I mean, not particularly. I mean, again, it's a lot of OEMs that have been doing things a certain way for a long, long time and a lot of them are now realizing that they're in this distribution model that's been a little different and they have to do things a little different. They have to pivot a little bit. You're seeing them invest a lot in the quality of their dealerships and trying to grow them up because there's 20-some thousand OPE type dealers. And my definition of OPE is probably a little different than the standard. I also include a lot of the utility equipment, a lot of the landscape equipment and stuff for municipalities as well. So it's probably a little broader than most, but I think there will continue. And again, you've seen some electrification there.

The challenge that I heard from on the electrification side for OPE on some of the smaller units is on the mowers and things. Can they run them continuously for eight, nine hours a day? And if they can do it, they'll buy them. Not a problem. If they can't and they have to take it down and either not put it and charge it for three hours, that doesn't work for them.

Right.

Because then they have to buy another mower, then your capital investment's higher. It doesn't make any sense. So that's where I think maybe some technological improvements could really create an environment for some of that smaller type of equipment to be electrified. It may make sense.

Do you think we'll keep... we've kind of monitored the gas power equipment bans that are popping up across the country, some in Canada too. Is that something that continues, we keep seeing it, or has there been enough of a it's kind of with the shift in what parties in power in a state and it's going to come and go? Any idea on that?

Yeah, all I can give you is my opinion. I have no inside knowledge, but in the current state, it probably won't increase. I don't see it increasing in maybe a handful of states, but overall, I don't see it increasing right now. That doesn't mean it won't change in two years or four years.

Right.

It's a matter of the moment in time. And it's a shame to have that because you make a huge investment as an OEM and as a dealer to support that infrastructure. And then all of a sudden, there's a shift in the wind. Oh, we don't need that anymore. So a lot of people anticipated on some of the states that you would think that might push through legislation like that. And then I remember and I'll give you a specific example. I got stuck with a lot of electric tools in Washington. I had to ship them all down to California because I couldn't really sell them effectively in Washington. Some of the municipalities had mandates to buy them if they could have the business purpose, meaning that they covered the full range of the day. And there's not a lot available right now that can do that.

Thanks to Brett Davis for joining us for this episode of the Farm Equipment podcast. And another thank you to SurePoint AG for their support. And if you've got topics you'd like to hear us discuss in future podcast episodes, be sure to email me at kschmidt@lestermedia.com.

Until next time, thanks for joining us. I'm Kim Schmidt. Have a great day.