We heard from an old friend, and now an ex-equipment dealer, last week. He said he’s thrown in the towel, sold his single-store John Deere dealership and is now looking at other possibilities for what to do with the rest of his working career.
Kim Schmidt and I got to know Kevin Godfrey and his son Wally when we visited their dealership, Godfrey Bros., in 2014 upon its selection as Farm Equipment’s Dealership of the Year in the small store category.
Kevin and Wally knew what they were up against back then and hung on as long as they could, which was quite a bit longer than most other single-store Deere dealers were able to. In writing about the dealership at the time, it was pointed out, “Single-store dealers who handle John Deere farm equipment are becoming a vanishing breed. Kevin Godfrey knows this. He also knows other small Deere dealers who have been squeezed out of the business to make way for the company’s ‘bigger is better’ model for its retailers. He's feeling the pressure and understands the push for larger multi-location dealerships isn’t going to go away; it’s how Deere wants it.”
He said that he had spoken with Deere about the possibility of expanding his dealership’s business but was told that Godfrey Bros. wasn’t in their plans. At one point during the interview Wally admitted that it was tough knowing “I will never own a John Deere dealership.”
At the time, Godfrey said the dealership’s tenuous working arrangement with its major supplier hasn’t made it easy taking care of his customers. But up to that point they had been able to defy the odds, and their same customers had remained loyal to the Godfrey Bros. dealership since his father and uncle acquired the Jonesville, Mich., location in 1974.
What I remember most about that interview was how Kevin wasn’t about to let the situation get him down. He said the dealership couldn’t succeed if he took his situation with Deere personally. “The bottom line is they’re in control, this is the game and I’m in it. Each day we have to win more battles than we lose. You can’t let the other stuff consume you or take it personally, because it isn’t. It's business.”
At the same time, he and Wally kept pushing. The year prior to being named Dealership of the Year, Godfrey Bros. achieved a 63% market share and had sales of $20 million with 18 employees. They had a ROA of 9% and an absorption rate for service of 84% and 61% for parts.
Like most other farm equipment dealers, the last few years have been rough on Godfrey Bros. They still had 16 employees, but sales were about half of what they were when they were named Dealership of the Year.
In an email announcing the sale, Kevin wrote: “Finally gave in and sold out to Greenmark Equipment. After all the arm twisting, we gave in and sold out to them last Friday.” GreenMark now has 16 locations throughout Southwestern Michigan and Northwestern Indiana.
Despite it all, Kevin remains his typical upbeat self and is looking forward to his next adventure. “I think we got fair value for the business and GreenMark has treated us really well,” he says. After tying up the remaining details of the sale, he and Wally plan to start looking at what they might do next. That’s still up in the air, but I’m sure they’ll figure it out and go after it with the same zeal and enthusiasm they brought to their farm equipment business.
And dealer consolidation will continue and it won’t only involve John Deere. Last week at CNH Industrial’s Capital Markets Day event in New York, CNHI leadership made it clear that they, too, are looking to streamline its dealer network, with a goal of a 10% reduction across its various business segments.
To reiterate what Kevin said earlier, “The bottom line is they’re in control, this is the game and [we’re] in it. Each day we have to win more battles than we lose. You can’t let the other stuff consume you or take it personally, because it isn’t. It’s business.”