FarmTrac Troubles

[DavesTractor]

Dave,
Things must be different where you are most of the info I have received on Mahindra is that yes they are financially sound for now but in the tractor market as whole they are not doing so well. I know they have been practically begging for dealers in the Mid-west I really hope they stay solid because we definately don't need anoth FT issue. I have been looking for another brand to carry but from reports I am not sure if Mahindra is the one I would pick.

Blurr, I think you are not getting accurate info. Mahindra sold over 110,000 tractors last year, more than any of the "minor" brands by far. Of course most of that was not in the USA. They have a huge market share in India, and India is the single largest tractor market in the world, or so I have been told. I would suspect that is their most profitable location. As a global company that will soon be selling their pickups and SUVs in the USA, you have nothing to worry about with Mahindra. Even if the USA market is less profitable for them, they must be here as it fits with their ambitions. I think the mid-west, especially big acreage farm areas is going to be the toughest market for them. We don't have anything larger than 75HP (soon to be 82), and we don't have combines, etc. For the rural lifestyle type market and the smaller farm market, Mahindra is doing real well.

The Farmtrac issue is a wake up call, and it certainly is not the first time a company has pushed some tractors into the USA for a while then failed or bailed. We may see more of this if the economy continues to cool, but Mahindra is here to stay.

 

[MessickFarmEqu]

The Farmtrac issue is a wake up call, and it certainly is not the first time a company has pushed some tractors into the USA for a while then failed or bailed. We may see more of this if the economy continues to cool, but Mahindra is here to stay.

While they are very different companies... wasn't FarmTrac's US marketshare about the same size as Mahindra's? Your talking like 3-5% of the market. I just can't see how that can be profitable for these companies. Our dealership employees more people and does more business than some of these minor brands. I just wonder how they stay in business even with a strong market?

 

[DavesTractor]

While they are very different companies... wasn't FarmTrac's US marketshare about the same size as Mahindra's? Your talking like 3-5% of the market. I just can't see how that can be profitable for these companies. Our dealership employees more people and does more business than some of these minor brands. I just wonder how they stay in business even with a strong market?

Neil,

I don't have US market share numbers for each company. It would surprise me if FarmTrac had equal market share with Mahindra. Mahindra's sales in the USA are around 10,000 tractors a year, which is far less than Kubota, JD and New Holland. If your own dealership is selling that many per year, I'd be truly impressed!

Keep in mind that this is a global market for Mahindra (and all tractor companies), not just the USA. Some areas will be more profitable than others at various times. The larger companies have no problem dealing with this.

I know what you saying though, and it is often true. A couple of guys with a pocket full of money or a credit line can go to Korea/India/China (pick your country) and buy a couple containers of tractors and come over and start their own tractor line. They hire a few guys to put them together and set up a few dealers. They cannibalize one tractor for the "parts department". Then the reality of doing business in the USA hits and they are gone.

 

[a blurr]

Dave, I do realize Mahindra is a large company and they have numerous tractors out there but even the numbers in India are lower than Escort (Farmtrac). The tractor data shown is that Escort is the largest tractor co in India. The numbers shown to me by Mahindra over the last couple of years had Mahindra behind Farmtrac in total U.S. market. Again I hope that they do stick around but the data on India being the largest market is not in number of tractors but in MFG. Every major brand is now Mfg. tractors in India. What the numbers truly say is that labor is cheap and quality is questionable. The tractor market is just like the zero turn market, it is so flooded and keeps getting worse. Way too many players and the market can only handle so much. I am afraid that Farmtrac is just the begining of the fall or at the very least consolidation. I wish there was room for all of them and we could all have good market share. Normally the fact is that it is not so much the equipment but the management of the tractor companies. After a lifetime in this equipment market I do feel that it could get a little worse yet before it gets better, but I hope I am wrong. But after all, this is all just my opinion with exception of the data that these companies provide.

 

[DavesTractor]

Dave, I do realize Mahindra is a large company and they have numerous tractors out there but even the numbers in India are lower than Escort (Farmtrac). The tractor data shown is that Escort is the largest tractor co in India. The numbers shown to me by Mahindra over the last couple of years had Mahindra behind Farmtrac in total U.S. market. Again I hope that they do stick around but the data on India being the largest market is not in number of tractors but in MFG. Every major brand is now Mfg. tractors in India. What the numbers truly say is that labor is cheap and quality is questionable. The tractor market is just like the zero turn market, it is so flooded and keeps getting worse. Way too many players and the market can only handle so much. I am afraid that Farmtrac is just the begining of the fall or at the very least consolidation. I wish there was room for all of them and we could all have good market share. Normally the fact is that it is not so much the equipment but the management of the tractor companies. After a lifetime in this equipment market I do feel that it could get a little worse yet before it gets better, but I hope I am wrong. But after all, this is all just my opinion with exception of the data that these companies provide.

Statistics always seem to get us in trouble between brands as everyone counts different, but Mahindra has more market share in India than any other brand and has had for years. So I guess I am just saying not to put us in the same group as FarmTrac. Totally different, with the only commonality being a parent company based in India. And I mean no offense to FarmTrac and the dealers that sell them, just don't group us all together.

Will there be more consolidations, failures, etc? I suspect there may be. If you look at the history of tractor manufacturers worldwide for the last 100 years, it has been a pattern. Even some of the big brands have fallen by the wayside.

 

[a blurr]

Dave,
I can appreciate your loyalty to the brand and I was not trying to put them in the same basket but they are. Both are Indian conglomerates with ties to a U.S. Company in their roots. They both Mfg tractors and purchase tractors from other Mfg for resale. One has ties to the automobile industry and the other railroad industry. Both companies have nearly the same kind of quality control issues. I am not saying either are bad tractors but they are very close to the same branch on the same tree.
I will leave it at that. I am not trying to start a whos who or a good and bad conversation but alike they are just as the JD 5003 (I think it is that series)series is very close relative of both Mahindra and Farmtrac by design and look. I hope they all survive and sell sell sell.

 

[EFC]

California,
The Distributor(Farmtrac) is not owned by the MFG (escort). From my understanding Farmtrac is owned by a financial holdings company called S&S Holdings. Escorts of india is still biliding tractors and parts for all their tractors throughout the world.....except here in the U.S. I guess I should say there is not a network for them here in the U.S. until Farmtrac or some other company emerges and wants to play ball.
As for Mahindra they are supose to have money but then again so was FARMTRAC. I believe the ownership of Mahindra is set up similar to what Farmtrac is but I can not say for certain. There is a distributor of their tractors here in the states and they use the same name as the ones in the rest of the word but the ownership here is not a sole branch of Mahindra.
That is how it was explaind to me a couple of years ago.

Mahindra USA is a wholly owned subsidiary of Mahindra & Mahindra India. That is the big difference between Mahindra and Farmtrac. If it would have been Escorts USA I think it would be a different company and a different outcome vs. the current events. Some foreign companies like Mahindra, Kioti and Kubota for example want to be in the US and other companies like Escorts, LG, TYM, Mitsubishi, Iseki, Shibaura and Yanmar dont object to their equipment being sold here but avoid an outright front seat presence and instead take a backseat to a US bound customer/distributer. I cant really blame them since if the US distributer fails the liability is minimal for them.

At least two more of the short lines will drop off the map for sure and a third is on the fence, but I dont think it has anything to do with the economy, they were on their way down from the first day and like Dave said the harsh reality of the tractors business eventually sets in after the hype runs out. Mahindra is here to stay for sure, they started small and have been building in line with their customer base similar to the way Kubota entered the market.

I have sold tractor lines that have come and gone, but in the end we honored the warranties even when the companies wouldnt and I still support those customers today. It was certainly painful and expensive but really there was no other option.

Buck

 

[Ned Farlinger]

Hay Ned, it happened to green already "Oliver".

It's highly unlikely that an extremely successful, and one of the best managed companies on the globe like JD will go the way of The Oliver Farm Equipment Corporation. You may want to locate a backup source for parts for that orange tractor you have...you never know. I would guess your orange company would be closer to a Farmtrac like situation than JD would be. But that would be hard to prove, wouldn't it? When was the last time you read a Daedong financial statement? Let me answer that question for you...You have not and never have.

Well I know for a fact the JD is financially sound because I can read and understand their financial statement because it is available to me and anyone else who would like to do so. As a NYSE listed company they have to provide investors things like financial statements.

Maybe I'll go purchase another piece of JD equipment next week with my JD dividend check. It's great getting dividend checks...even from a shaky company like JD...

 

[EFC]

It's highly unlikely that an extremely successful, and one of the best managed companies on the globe like JD will go the way of The Oliver Farm Equipment Corporation. You may want to locate a backup source for parts for that orange tractor you have...you never know. I would guess your orange company would be closer to a Farmtrac like situation than JD would be. But that would be hard to prove, wouldn't it? When was the last time you read a Daedong financial statement? Let me answer that question for you...You have not and never have.

Well I know for a fact the JD is financially sound because I can read and understand their financial statement because it is available to me and anyone else who would like to do so. As a NYSE listed company they have to provide investors things like financial statements.

Maybe I'll go purchase another piece of JD equipment next week with my JD dividend check. It's great getting dividend checks...even from a shaky company like JD...

I don稚 think anybody said JD was a shaky company but it is not immune from poor management or the realities of the market. Not very many companies exist for 100 years, less for 125 and even less for a 150. JD is at the top of the wood pile which means they are the biggest target to shoot at. They have earned their right to be there no doubt but I am in a big tractor farming area and I see more red and Blue than green these days. The decades of devoted fans that paint themselves green from the waist down each morning like yourself are getting harder to find. Customers are asking about value and options and less about color. JD knows this if you actually do read there financial statement, they even talk about it. Properly managed they will be around for a long time, poorly managed and they are gone like everybody else.

My accounting teacher told me he knew which accountants would rise to the top in their field and which would just make a living. When asked the sum of 1+1 if they answered 2 it meant?just make a living. If they answered "what do you want it to be" they would go far. Guess who writes financial statements. I should go reread my Enron statement again or maybe even my Citibank statement, I am sure it mentions the end in there somewhere.

Buck

 

[chh]

Here's the link to Daedong's finacial statement.


Daedong Industries (000490.KS): Financial Statements - BusinessWeek

BTW for those interested in looking at the far east or India to invest don't forget Tata. They are the worlds 6th largest steelmaker and one of the worlds largest conglomerates. They are recently famous for the cheap car, but are also the preferred bidder for Ford's Jaguar division.