Will some tractor makers not survive?

[DieselBound]

It all comes down to one thing: Growth.

Growth is what provides incentives to shell out for R&D and to bring out new models.

To-date growth has been through expanding markets via the "global economy" and or through absorption of competitors: last couple of decades has been more of the former. More and more it is becoming the later, which tends to decrease the overall workforce, which then tends to reduce the available customers. If you look at growth forecasts you'll find that they're not looking to good: there's a pretty good correlation between interest rates and growth- knowing that most countries are pretty much at ZIRP (Zero Interest Rate Policy), and some even going negative, should tell you what the expectations are for future growth.

Unlike with larger commercial farms and such, many folks in the CUT arena aren't turning over their equipment at rates that happen with the big boys: the corporate farmers schedule in replacements. I am currently buying my first new tractor, and it'll be my last one too (hopefully it'll last). Figure CUT level sales are a more obvious bubble.

Anyone see the lights on in the Edsel factory?

 

[MessickFarmEqu]

From the start of the compacts Kubota has lead the market with quality as well as innovation. Still the market leader in compacts in this country by a good margin with jd behind them making up 1/2 the market with those two brands alone. Mahindra is coming in third with about 15% and the rest of the players split the remaining roughly 30 percent between the next ten companies.

what I've been hearing number wise does not quite jive with this. I'd still peg Kubota & Deere at 3/4 of the market. My impression has been Mahindra is consolidating sales from the other value brands more than they are from the market leaders.

 

[houstonscott]

Kioti, Branson, LS, TYM, Bobcat. Again I don't know the age of the parent company. But they're all fairly new brands.

LS has been around since 1940's, Branson is an LS. HS

 

[MHarryE]

We've seen at least 2 branded tractors bite the dust in the past 3 years - Bobcat and Cabelas. Not sure how it effects the OEM to lose those sales, probably insignificant for Cabelas, may have been a little pain for Bobcat. More of a concern for the owners of these brands who want to trade. As the CUT popularity grows, will new sales be affected by an increasing used market? I've traded in 2 CUTs in the past 5 years - both will be good tractors for their new owners. A lot of buyers might consider a used model from one of the 2 biggies over a lesser known name.

 

[AxleHub]

To me its about buyer dollars. Certainly the last 3vyears have not been kind to farm operations . . The large tractor manufacturers are effected. You can raise the price but that doesn't counter the dramatic declines in newly made big tractors and their implements.

So Utility and Compacts and scuts are the selling end that has seen growth of newly made sales . . but does anyone really believe the US economy is that healthy?

Many scuts and cuts have been sold to the bany boom.genetation the last 4 years ad retirements have loomed more likely . . but that purchading volume is not unlimited and we've seen all the primary brands increading the wartanty lengths and buyer's incentives just to maintain the existing sales volumes at the very same time as competitors have grown in ability and quality offerings.

I believe we will see consolidation of manufacturers just as we've seen dealerships consolidating or retiring. Personally I thinl JD has made dome strategic errors in forcing smaller but stable dealerships to take on even more inventory quantities. Dealers that were 30 year JD dealerships have pushed back and said "no" and become dealers of other lines to avoid the financial burden. I know 2 of them . . and JD will miss their efforts and expertise in those areas.

And dealers in my area of the country have been changing and adding product brands to their existing product choices. There are numerous long time Kubota dealers who now also offer the massey product lines. There is a reason to their decisions.

 

[sixdogs]

what I've been hearing number wise does not quite jive with this. I'd still peg Kubota & Deere at 3/4 of the market. My impression has been Mahindra is consolidating sales from the other value brands more than they are from the market leaders.

If JD and Kubota have 3/4 of the market, that leaves at least 10 other makers to scramble over the rest of the pie. Those makers still have the same or similar fixed costs so JD and kub can produce the product at a lower cost of those 10 extras. Any entrenchment in the market could leave the top two able to grab even more market share and further squeeze the competition.

Service and loyalty is likely going to matter even more than it does now so I think those that fail will do so not only because of price competition but also sloppy customer and service support. Just my two cents here.



Personal opinion here.... You do have to give kubota kudos for taking the long view over the years and placing the customer first even at times they shouldn't. Inch by inch and row by row they weathered the storm and persevered while others gave away market share from fumbling the service or sales ball. I sure wish they were an American company and success story.

 

[4570Man]

If they were American they would have to build a poor quality tractor to make up for the increased manufacturing cost. There's a good reason why besides firearm manufacturers almost everything has moved overseas.

 

[TomSeller]

I don't think Bobcat and Montana will survive

 

[AxleHub]

I don't think Bobcat and Montana will survive

I keep wondering about companies like TYM/Branson as an example. I think Cabelas loss is bigger than some think . . not because of how many they initially sold but because it gave TYM potentially 40 to 50 full line dealers and service network for the future. I emphasize the "full line" perspective.

TYM might be doing fine as an engine builder . . but on their own they don't seem to be getting the speed momentum they need as the competion is tightening. That's also been Branson's issue. So now they are retooling their brand setup and identity when they expected to be going full bore with the help of Cabelas as an addition. The dealer network they have now between the 2 brands is going to take much more development and adjustment imo to get a stronger profit margin and gross profit of sales number . . as engine building for Mahindra isn't the key . . again imo.

And Yanmar is another example of a work in progress with a stunning history of engine successes. They need a marketing partner to come along and boost their U.S. momentum imo.

I'd still not heard an answer on a question I posed some posts back . . the number offered was Mahindra was 3rd in tractor sales with 15% . . however I asked if 15% was the U.S market or North American msrket or numbers from the World market . . as I have a hard time believing Mahindra has that big of a position over Massey and Kioti in tractor sales in the U.S..

Jmho

 

[coralhead]

LS has been around since 1940's, Branson is an LS. HS

Kukje Machinery (Branson/Century) has been in the agricultural market since the mid-60's.