I’m not sure dealers in North America will find much comfort in knowing that the situation between farm equipment dealers and their mainline suppliers here isn’t very different from that of their German colleagues. Or that ag machinery dealers are facing very similar challenges to the retailers of automobiles and other equipment. But sometimes it’s good to know you’re not alone out there.
Last week, we had the opportunity to compare notes with a couple of gentlemen from Germany who work for a publishing company that also publishes a dealer magazine much like Farm Equipment.
As we talked about issues relating to manufacturers’ efforts to control their business at the retail level that are confronting our readers, they nodded knowingly, saying, “Yes. It’s the same in Germany.” When we mentioned “dealer purity” for example, they remarked, “What an interesting way of describing that problem.”
They said it’s not out of the question for German farm equipment dealers who get frustrated with meddling from their mainline supplier to completely switch brands. According to our visitors, recently one significant dealership handling John Deere equipment had enough of their supplier’s fingers in its business that it voluntarily dropped Deere products and are now selling Massey Ferguson equipment. Do you think that would ever happen in North America?
They also described the tiered dealership system in Germany, which is comprised of “A,” “B” and “C” dealers.
“A” dealers are the only ones who deal directly with the OEM and act as distributors to the “B” dealers. Any equipment sold by a “B” dealer is ordered from an “A” dealer not the OEM.
As for “C” dealers, our German visitors said, “They sell and fix whatever they can,” from farm machinery to trucks. They’re being squeezed as the equipment becomes more sophisticated and generally stick to working on mechanical systems.
They say the “B” dealers are in a particularly difficult situation as the OEMs would prefer to see them go away and all retail efforts consolidated with “A” dealers only. The parallel in North America is the pressure being put on single-store or smaller dealers to merge or sell out to the larger dealer networks.
I suppose this is interesting to know, but hardly comforting if you’re considered a “B” or “C” dealer.
In other dealer news, I recently came across an interesting news item about how automobile and other equipment dealers in New Hampshire are pushing hard for a “Dealer Bill of Rights.”
According to an April 24 report in Seacoastonline.com, a publication based in New England, (http://farm-equipment.com/ff/seacoast) “The bill includes not only vehicle dealers, but also dealers of equipment such as farm machinery, snowmobiles, all-terrain vehicles and the like.”
Dealers pushing for the bill say that manufacturers are demanding that they expand or make major changes to their locations or “purchase expensive items like marble counters or custom chairs from only approved vendors.”
One dealer reported that he had to tear up a “perfectly good tile floor because it was the wrong color.” He added that he was also required to purchase and use “fabulous leather chairs.”
A Honda dealer reported that he was being pressured into a $9.5-10 million rehabilitation of his dealership that will make it a “cookie cutter” version of other dealerships. “Having it Honda-ized is not going to add value,” said the dealer.
According to the article, Daniel Gage, spokesman for the Alliance of Automobile Manufacturers, says that dealers are not being forced to upgrade their facilities. “When it comes to improvements, upgrades and expansions, those are initiated by the dealerships and are made voluntarily,” he said.
Another part of the bill would require manufacturers to disclose annually any information they have about a dealer — “a first-in-the-nation provision that is necessary for transparency,” the dealers said.
Bob Marrazzo of Townline Equipment Sales in Plainfield, N.H., said it is important that the farm and utility equipment he sells be included in the bill because he’s facing the same problems as the vehicle dealers.
He claims one farm equipment manufacturer has threatened to remove its product from his dealership if he sells similar equipment from a rival.
According to the article, a spokesperson for the manufacturers said that dealers are “willing, voluntary business partners” who are overreaching with some of their demands.
That sounds familiar. Where have farm equipment dealers heard that before?