I can’t say I’m a big fan of this time of the year. While farmers are anxious to get in the fields and dealers are busy helping them get ready, I’m reading all of the speculation that industry pundits tend to toss around just before planting season. Most of it doesn’t say much.
It’s during these times that I pay particularly close attention to the comments from our monthly Dealer Sentiments survey. Based on the results of the latest survey, it would seem safe to say things are no better or no worse than they have been for the past 18 months or so. I think one frustrated dealer really summed up the current situation: “We continue to be plagued by low traffic, despite increased advertising and farm visits. It seems there is little we can do to get the ball rolling.”
Every once in a while, there seems to be a bright spot, like the rally in grain prices we saw last week. Considering there’s been no real change in industry fundamentals, there’s probably little chance that it’ll stick around for long. Another dealer said pretty much the same thing about foot traffic at his dealership: “The first half of the month was dead for our business, but as the weather improved at the end of March, we did see a bit of a pick up. It is hard to tell if it’ll stick, but at least we have some foot traffic.”
Like many of us, apparently USDA’s March acreage report also got farmers’ attention. One dealer reports: “Customers really were impacted by the USDA report, and it made farmers even more conservative about considering to trade in equipment. Prices are just at a level that is difficult for players to be profitable.”
Another dealer said that his sales are up, but for all the wrong reasons. “Sales are up for us in total because we’ve been giving away equipment at fire sale prices. Farm auctions have dragged pricing to the ground, and we’re worried about getting stuck with inventory.”
It appears that the used equipment inventory situation has gotten somewhat better, but again the improvement is coming at the expense of dealers’ bottom line. “It doesn’t seem like we are near a bottom in used equipment pricing. I suspect it will continue to be difficult to handle used inventory, and have been extremely cautious about taking trade-ins.”
The one bright spot for dealers continues to be small tractors and consumer-type equipment. “Tractors under 100 horsepower continue to sell well, while everything else is considerably down for our business. We expect that small equipment sales will keep doing well going forward.”
The sale of parts and service was expected to be another bright spot for dealers this year, but apparently that’s not going as well as was hoped. “I didn’t expect parts/service sales to be this weak, especially given the lack of new equipment purchases,” said one dealer.
So there you have it. On the doom and gloom side, things haven’t gotten any better. On a brighter side (if you can call it that), they haven’t gotten any worse either.