Dealer What do you think is a fair profit for dealers.

Bob_Skurka · Jan 1, 2005

That said, the biggest problem, as has been pointed out already here, is that the typical consumer does not compare apple and apple. 

This is probably not only very true, but also based on the ignorance of many first time buyers. I'm not using the term insultingly, but pointing out that many are clueless. Heck my neighbor has a Craftsman LT to mow his 3 acres, he saw me out one day and asked the price of one of my tractors, and he guessed it would be about $4000. I think the diesel engine was worth more than his guess. He based it on the fact that my CUT "looked" roughly 4 times bigger than his little LT so it should cost about 4 times as much.

 I think Kubota has increased HP ratings on some smaller framed tractors. Shrewd Move. 

I'm not sure about Kubota, but New Holland is in the process of doing exactly that. Their TC21 will be a 23hp. The TC24 jumps to 26hp. Higher engine speeds and tweaks combined with a change in gearing allow this. Also take a look at the new John Deere units starting about 50hp and see that they are working their way down their product line by replacing older models with newer units that have higher HP ratings.

 I think the Koreans in general have lost some of their "2nd tier" price advantage, I also think the majors are rolling up thier sleeves for a good fight and have come up with low cost models to close the gap. 

My local Kubota dealer told me he is not worried about Mahindra because he has the low priced Kubotas that he can effectively sell against them. As for Kioti, he wasn't concerned because they've made few inroads in our area and he has Cub's 8000 series to sell (made by Kioit) but he said nobody wants the Cub 8000s when they can get a Kubota. He might have his head in the sand!

Going back to the original question, John gave a good starting point with his suggestion that $1500 to $2000 would be about right on a $15,000 machine. Another post indicated that JD regularly sells at list price less about 15 to 20%. So combine the two posts and take a look at the $15,000 machine a little differently. $15,000 less 20% = $12,000. Consequently, to make a "fair" profit, a $15,000 tractor should cost about $10,000 to $10,500 for the dealer to purchase?

Is any of that fair? I don't know. But it certainly gives you dealers some insight into the minds of us consumers.

bluechip · Jan 1, 2005

Thanks Bob. Some good points as usual. Your neigbor's comment about the cost of your tractor reminds me of the other reaction we often get when we quote a price to a first time tractor shopper... a Quiet, hard gulp. If they dont start beathing soon, I walk em down to the end of the line to the lower cost products. By the same token if they are unimpressed with the value offered by the Chinese product, I walk them back up the line, but that walk is a lot harder, at a rough $100 or more per foot traveled.

I have to admit, tractors sere much more expensive than I thought they would be when I first started looking around...so I cant fault em.

In any event, the market looks good for 2005 once agian, so now is the time to secure market share, otherwise the slow times could be the end times...so if we have to buy business so be it, I just wish some of my suppliers would use your reverse logic when dertermining their prices.

Have a great 2005!

krazykioti · Jan 1, 2005

I also agree with kioti john that Kioti should list a msrp on there tractors. It is good businees for both the dealer and the buyer. The tractors should have an itemized window sticker just like what is shown on automobiles. This would clear up a lot of grey areas as far as what comes standard and what is optional on the tractor.
The automotive msrp window sticker also protects the buyer from fradulent dealers that might try to tack on $1,500 -$2,000 to the price of a vehicle for undercoating & pinstriping and other do dads on automobiles. I have seen this happen a lot in the automotive retail business in the past.
The msrp window sticker exists because of a federal law that prevents some dealers from "skinning" the customer.
The majority of dealers do not tack on other costs to the msrp. Added costs have to be on a separate sticker.
Having a msrp sticker on there tractors would be a very smart move for Kioti!. Just my two cents.

Charlie

Keith_B · Jan 2, 2005

I am one of these first time buyers. As I am beginning the process one of the first things I do is look at a tractor's specs, and this goes beyond mere gross HP ratings. I look at 3PH lift capabilities, loader lift capabilities, PTO HP ratings, warranty duration, over all weight of the tractor, transmission types, finance terms, etc.

There are some things that I consider to be necessary in the tractor I ultimately purchase, and some things I would like to have, but are not necessarily required by me. I want the tractor to have a pair of hydraulic rear remotes, in addition to the remotes needed for a loader. I don't really need the remotes now, but I want them there in the event they are needed later (when it may be more expensive to add them. I know I need folding ROPS, in order to make it easier to clean one of the barn sheds where I feed my horses. I want a 12X12 or 16X16 shuttle tranny, but that is not a necessity. I am interested in something in the 40-45 gross hp range, and turning around 35 PTO hp, so I can use some existing equipment, such as 6' disk and 6' bush hog.

I would really prefer MFWD, and would have to do a lot of soul searching before opting for a model without it.

If my decision comes down to models I consider to be similar with the items I consider necessary, like the DK45 and the Kubota L4300, and they have similar prices I will then go to the wants list. The Kubota doesn't come with the shuttle shift tranny in the L4300, so the Kioti would likely get the nod. However, if the Kioti were to be more expensive I might give the nod to the Kubota if I determine the shuttle tranny is going to cost more than I am willing to pay.

If I would still consider two tractors to be even after considering my wants, I would then look at the extras offered that are not on my lists, but could be important, things I consider operating luxuries.

I was just using the Kioti DK45 and Kubota L4300 as an example, because of the earlier mention of Kioti vs Kubota. Even though I am considering both machines I have not yet gotten to the point where I am sitting down and looking at the specs on each individually, and collectively.

At present my list of machines to consider are:

Kioti DK45 (maybe even the DK40 if/when I get a price on it)
Kubota L4300 and L4330
Mahindra 4110 and 4500
NH TC40 and TC45
McCormick GX40/GX45/GX50
Massey Ferguson 1440V/1445/1455/1455V
Farmtrac 360DTC/45/450
Cub Cadet 8424
JD 990

While these models are not all comparing apples to apples, they all do appear on the surface to perform the tasks I want them to perform. Not to mention all fit into the price range I have in my mind for my tractor budget, which I am not too willing to exceed.

There are some other machines I would consider, if the price was right; however, at the present time it appears they are outside the budget I have in mind. There are some very nice John Deeres that I would like to have, but there capabilities are not going to warrant exceeding the Kioti in price by $5,000+; which at present time it appears they would. If the NH machines are priced like I feel they will be I also see them dropping by the wayside.

I also realize at the present time that the JD 990 will likely come in at the lowest price, as it should since it probably has less impressive specs than many of the others, and is a very basic machine. It is unlikely I will end up with it, unless a dealer would offer me a deal I couldn’t refuse, coupled with other dealers not putting forth prices I think are appropriate for the machine they are trying to sell me. Ofcourse, a dealer can do a lot to either gain or lose my business based on the way they approach working with me on the sale.

I know this post is a bit lengthy, but I thought the dealers might be interested in how a potential customer approaches the process.

Bob_Skurka · Jan 2, 2005

glsweet & bluechip

Take a very long look at Keith's post. He makes some excellent points that perhaps some people would argue with, especially on an Apples to Apples comparision between brands. However it illustrates very well the mind of the consumer and what the consumer is willing to compramise on and what they are not.

Specifically Keith wrote: While these models are not all comparing apples to apples, they all do appear on the surface to perform the tasks I want them to perform. 

So when you, as dealers, try to point out that the loader on your model is superior to the loader on brand "X" it may be in your best interest to realize that either loader will very likely get the job done, and that both are a lot better than a shovel & a wheel barrow! I have been very critical of the loaders on Kubota B series tractors, especially when compared to the 120 and 130 loaders on the CK Kiotis and the TC series New Hollands. Simply put both the CK & TC loaders totally outclass the B series loaders (capacity & visibility), but all 3 brands will move a pile of mulch or carry a bucket of gravel.

Much of the same can be said about other features such as 3pt capacity. I've always dismissed it as irrelevent but I know others have really considered it is a major factor. Most EVERY modern tractor has a 3pt capacity that will just about lift the front of the machine off the ground even if the FEL bucket is full, so the 3pt capacity to be more of a "theoretical" capacity than a practical one. And lets all face it, a swing in capacity of a couple hundred pounds on the 3pt on a smaller tractor (anything under 40hp) is essentially irrelevant to a typical homeowner or even a professional landscaper.

I think Keith is probably a more informed buyer than most but he points out some things that probably many of us dwell on but that many others don't really care about. Very informative. Worth reading between the lines 2 or 3 more times.

EDIT: A couple more thoughts along the same line as what Keith pointed out . . . in my neighborhood (25 homes on 155 acres) most everyone has a tractor, they range from a couple JDs with more than 40hp down to some lawn tractors. Of that group of machines, mine are probably the only ones that have been modified with additional lights, 12volt outlets, an for that matter I'm sure I have more implements than anyone else except for the real farmers up the road from me. So that said, the guys in my neighborhood with light duty Kubota stock alternators can easily compare their machines to any brand that has a H.D. alternator simply because, as Kieth said, either one will get the job done that needs to get done. Several of the CUT owners in my neighborhood do not even have FELs, so standard joysticks/hydraulic contols are moot points to those folks . . . and to anyone with a FEL if the tractor didn't come with it, then the loader did so what difference would it make to a typical buyer? The same could easily be true about extendable lower links . . . if they are not changing implements every week (or a couple times a day like I might do) then why should they care? I really think the typical TBN member is NOT a typical tractor buyer, we are small minority who love to play with tractor; probably no different than a typcial gun owner versus a typical N.R.A. member. One passively owns a gun the other may take a much more active roll in shooting sports. Just some more thoughts that I came away with from Keiths post.

bluechip · Jan 2, 2005

Thank you Kieth for sharing your perspective. Sometimes ad dealers, we foreget to get into the buyers shoes. We need to do that every time. You are in fact much more informed than most first time buyers and are sure to make a wise investment when you buy.

As a dealer I am a little bewildered at the long list of candidates a buyer must consider, I am sure it is just as daunting to the buyer. I have learned that buyers do not buy on the first, second sometimes 4th or 5th visit and understanding the number of options helps explain this. (At least I hope is not my lack of salesmanship!).

The better specs and features such as folding rops and remotes do cost. they are probably less expensive on the Kioti because they are standard equipement (meaning the cost is included in the base price) as opposed to optional.

And Bob, yes, I have read it a couple of times....so far!

DirtHauler · Jan 2, 2005

I too was a first time tractor buyer getting frustrated with dealers and thier priceing. Around here, with in a 25 mile distance, I had the choice of several brands, i.e. CAT; JCB; JD; NH; BobCat; CUB; McCORMICK; FORD; Kubota and Kioti.
Rather then drives myshelf nuts comparing ALL these to one another, I just went for the "orange". I wanted a "small" tractor and first looked at the BX23 (cute!) but got "shocked" after getting the bottom line! BX23, box scraper and rotary mower = $21,000.00!! true it does come with a BH but still alittle more then budget. Next went to dealer to check out the CK20 (I know, bigger then the Sub BX) nice machine, priced it out with the same implements less the BH, WOW! Almost $6000.00 less even with the BH it was at least $1.500 less.

But always looking to get the "best" deal, I looked for other KIOTI dealers and was surprised to find out that these dealers are far and few, the only three I could find are at least 60 miles apart, so I played the phone/fax thing for several weeks. It got frustrating after awhile as I noticed that prices where "all over the board", they ranged from $13,000 to $17,000 depending on which person you talked to on which day. I also discovered that some dealers priced the tractor, added the remote valve and then the loader assembly, I thought the joy stick/valve came pre-installed?

The next issue came when I wanted to compare the ST and HST, no dealer had one of each. ST's where common, only one dealer had an HST and it was 70 miles away and was a "demo" with ONLY 30 hrs. on it which he offered to sell for $15,000 (no implements), seems for some reason that HST's were hard to get out here in the west coast so if you wanted one and found one, you'd pay the price! (is this "mark-up"?). I asked if I could just drive over to the warehouse to look and compare, the west coast warehouse is only a 2 hour from me, but was told "no" that only dealers were allowed there.

It seems that some dealers will asked what ever price the "public" will pay. So, with all these prices and no standard base price to go by, I called KIOTI in N.C. and told them of the problem priceing, gave them my list and asked if they could give me the MSRP for my area, they happily faxed them to me and told me they included the dealers "profit".
Armed with this info, I went to my dealer and got what think was a good deal:
CK20ST w/R4's (filled) $11,836.00
KL120 loader $ 1,990.00
48" bucket $ 242.00
DISCOUNT $ 1,889.00 -
BB48 4' Box Blade $ 435.00
400 4' HOWSE mower $ 775.00
DISCOUNT $ 200.00 -
SUBTOTAL $ 13,189.00
TAX $ 989.18
TOTAL $ 14,178.18 (delivered)

I know prices in the mid west will probably be less.

So along with comparing aples to apples, having the MSRP can help. /forums/images/graemlins/laugh.gif

Keith_B · Jan 2, 2005

( The better specs and features such as folding rops and remotes do cost. they are probably less expensive on the Kioti because they are standard equipement (meaning the cost is included in the base price) as opposed to optional.
)

What I am seeing so far is that some of the manufacturers are luring people in with cut rate prices, that can initially be the same price or lower than the brands like Kioti, Mahindra, Farmtrac, etc. However, these cutrate tractors are not including some of the things I consider to be necessities, like the folding ROPS and dual hydraulic remotes or hydraulic couplers (depending on the brand). It appears there is a huge markup in these items, and when they are figured in the Kubotas and John Deeres prices increase dramatically.

This doesn't even include the niceties that the so-called second tier tractors include as standard equipment that are either unavailable or options for the value brands of the big three. Things like shuttle shift transmissions, draft control on the 3pt hitch, telescopic hitch ends, etc, makes a statement about the manufacturer of a tractor. That statement is in effect saying that they want the customer to get a machine that is user friendly and ready to do some serious and varied work.

My only regret about the Kioti is that I will likely have to travel 1.5 to 2 hours to visit the nearest dealers. I have purchased autos from that far away, so that would not be a deal breaker. I am also not opposed to going farther away than that, if necessary.

DK35vince · Jan 2, 2005

( My only regret about the Kioti is that I will likely have to travel 1.5 to 2 hours to visit the nearest dealers. )

My Kioti dealer is 1.5 hours away.
At times it is a little inconvenient, but so far hasn't been a problem. With the amount of money I saved not having to deal with my local Big 3 dealers it was well worth it !

Keith_B · Jan 2, 2005

( ( My only regret about the Kioti is that I will likely have to travel 1.5 to 2 hours to visit the nearest dealers. )

My Kioti dealer is 1.5 hours away.
At times it is a little inconvenient, but so far hasn't been a problem. With the amount of money I saved not having to deal with my local Big 3 dealers it was well worth it !
)

Vince, from the looks of the prices I have seen on some of the big three the Kioti allows me to go with the DK45, as opposed to the big three DK40 equivalents, and still come out $$ ahead.

I've got a feeling my decision is going to come down to Kioti and Mahindra, when I get all the price info.