A year to hold onto the 'old girl'

30 Dec, 2013 01:00 AM
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There will be more conversations about used equipment in 2014 as the majority of farmers look to consolidate operations.
This moves the spotlight to used equipment and machinery dealers.
There will be more conversations about used equipment in 2014 as the majority of farmers look to consolidate operations.

THE year 2014 will be one of percentages for the farm mechanisation industry.

A small percentage of farmers will buy new gear but a bigger percentage will either consolidate or buy used equipment.

Painting the big picture produces a graph showing new product sales down and used sales flat to positive.

Basically 2014 will be a year of consolidation for most farmers as banks beat the drum about debt reduction and farmers maintain a cautious approach to capital spending.

Realistically the industry needs three consecutive good years to get back on its feet and this underscores the reason why there won't be a big rush by the majority of farmers to buy new gear in the near future.

The other salient point is that even if farmers were in a financial position to buy the latest 4WD tractor, SP boomsprayer, combine harvester, or new seeding rig, supply is not there.

As you read this, it is too late to order new gear for the coming seeding season with December orders expected to land in WA in June or July.

This moves the spotlight to used equipment and machinery dealers.

There is a glut of used combine harvesters and dealers may be forced into a realistic position of lowering trade values on the back of trying to quit high hour machines.

There is a need for a new paradigm to enter the industry where more realistic pricing is achieved but this will need the co-operation of manufacturers, who set the initial prices.

Factory bonuses and hot deals will have to become marketing strategies of the past if manufacturers want to maintain strong dealer networks.

Increasingly the scenario is being played out where dealers are squeezed on margins by the manufacturer while responding to manufacturer pressure to sell new gear.

There is apparently no regard by the manufacturer for a dealer to conjure a value in January on a used header to be traded on a new model to be delivered in October or November.

This is the unwritten story of machinery dealerships, under increasing pressures as a main employer in a country town, juggling values while attempting to stay afloat.

A cursory glance through the classified section of Farm Weekly reveals the plethora of old gear wanting a new home.

It is where most farmers will go for any requirements for 2014.

A 4WD tractor with 5000 engine hours on the clock will still be a good buy along with self-propelled boomsprayers.

Trying to work out farmer intentions on machinery purchases is almost impossible.

One can assume farmers with good credit ratings and reliable five year budgets, have already factored in new machinery purchases for 2014.

For the rest, it will be up to the weather at the start of the season and the resultant gut feeling on any capital expenditure.

Or a shake or nod from the bank.

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FarmWeekly
Ken Wilson

Ken Wilson

is Farm Weekly's machinery writer

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