Editor's Note: This article was originally published in the Feb. 15, 2026 edition of Ag Equipment Intelligence. To view AEI content as it's published, you can subscribe to the monthly newsletter here.

AGCO’s 2025 year-end inventory — both at a company level and at its dealers — was “significantly lower” than in 2024 despite the soft market that “weighed on industry demand,” Eric Hansotia, president & CEO, said Feb. 5 during the company’s Q4 2025 earnings call. He noted that the company operated at intention-ally low production levels.

Full year production hours were down 12% compared to 2024, with North America accounting for the largest portion of that adjustment. Hansotia said that reinforced AGCO’s “disciplined approach to balancing output and market needs.” However, Q4 production levels were modestly higher vs. 2024 because increases in Europe and South America more than offset the production declines in North America, he said.

“For 2026, we expect production hours to be broadly flat year-over-year with a modest lift in the first half, reflecting easier year-over-year comparisons and a modest decline in the second half,” he said. “This cadence ensures production remains well aligned with retail demand and supports ongoing dealer inventory normalization.”

Regional Inventories. In Europe, AGCO ended 2025 with dealer inventories at approximately 4 months of supply, aligned with its target levels. “Being at these inventory levels in our largest and most profitable region is an important positive, especially with the industry projected to grow in 2026,” Hansotia said.

In North America, AGCO notched another quarter of sequential progress in inventory management, ending the year at 7 months of supply compared to 8 months at the end of the third quarter. “While still above our 6-month target, we reduced dealer inventory units by over 9% during the quarter and by more than 30% for the full year,” Hansotia said.

He continued, “We have significantly strengthened the quality of our channel inventory heading into 2026, and we will continue to adjust production to better align dealer inventory levels.”

Damon Audia, senior vice president & CFO, noted that dealer destocking advanced in 2025 and said AGCO continues to prioritize strong channel alignment in 2026, particularly in North America. He said this reinforces the OEM’s “disciplined and balanced go-to-market approach.”

He reiterated that production hours in 2026 are expected to be in line with 2025, maintaining a healthy balance between production rates and retail demand to support ongoing inventory discipline.

2026 Outlook. According to Audia, AGCO’s guidance for 2026 “reflects current tariff regime and mitigation through cost actions and pricing, ensuring a well-managed framework for navigating policy dynamics.”

The OEM plans to increase engineering expenses by almost $50 million year-over-year. Audia said that represents approximately 5% of sales and ensures “an investment level that fuels the flywheel of innovation across the portfolio.”

Commenting on the upcoming bridge payments, Audia said, “The U.S. government’s $12 billion Farmer Bridge Assistance program is helping to shore up farmers’ balance sheets, but is not translated into new equipment purchases at this time.”

AGCO leadership said it expects net sales of $10.4-$10.7 billion in 2026 and approximately $350 million in capital expenditures.

2026 Demand. Audio noted that interest rates, credit avail-ability, corn margins and weather in select regions will pressure demand in 2026. AGCO’s plan assumes relatively flat demand for the year with some pressure early in the year, he said, and a stronger second half due to potentially improved government support.

Key assumptions guiding AGCO’s full year 2026 outlook include relatively flat global industry demand compared to 2025. The company’s sales plan includes pricing to be up 2-3%. “At 3%, our pricing is designed to cover material inflation and tariff costs on a dollar basis, but will be margin dilutive even at the high end of the range, impacting our 2026 operating margins and our year-over-year incrementals,” Audia said.