Will all the brands survive ?

[Slackdaddy]

Wondering if all the new (or existing brands) of tractors will survive the coming economic down turn ?
Things are going to get rough for the economy, gas will be 4-5 gallon this summer, houses are losing upto 50% of their value, food is going up, tax's are going to go up.

and all these "new" tractor companies coming on the scene, how many will be history 2 years from now ?

Slack

 

[chh]

Several of the smaller brands could be off the market, IMO. Not necessarily out of business worldwide, but off of the US market. The big companies are still riding high off of the Ag sales(combines,implements, ect) pushed by the ethanol boom and high grain prices so they have those sales to bolster their bottom line. Companies focused on the homeowner market are the the ones that should be hurt the most by the lack of personal disposable income. A long term recession or depression could have a very negative effect on all brands.

 

[art]

They haven't all done well during good year so why would it be any different with a slow time?

I've been able to watch the ag markets for most of my life. I remember being at meetings with the US majors when they down played the Kubota's when they first stated appearing here in NY forty years ago.

I've sold manufacturers that we don't sell today because they changed there colors so to speak, making after sales service harder not counting trying to keep parts available for our customers. We are selling manufacturers tractors today under another color today that I didn't think we would ever sell but used!

With our three main brands to change colors I could say we have represented up to seven manufacturers at once!

For all of the brands there are today, there will be some gone either this year or next, some might get bought out, some might just close their doors.

There are three constants in life, Change,taxes and death!

 

[GaryCrowell]

The big companies like John Deere, Case/NH, Agco (massey ferguson) etc. are all experiencing boom times right now. Large ag equipment sales are up quite a bit due to the high food prices. These guys will prosper in current times. Kubota will survive because they're a well established high quality brand with large market share even though they don't have any large ag equipment sales. They'll take a hit in profits but their mass will let them weather the storm.

The ones that will be hurt, as the above poster said, are the smaller companies focused on the CUT segment. The compact utilities are generally homeowner products and being fairly expensive they'll be the first discretionary purchases to be put off. Likely a lot of guys will sell their small tractors to get out from under the payments, driving down prices on the used market. For most people their small tractors are wants not needs. I'd expect the kiotis, mahindras (U.S. market at least), montana, branson/century, etc. to fare poorly.

The guys on this forum who have been around farm country all their lives have pretty much consistently given the advice that those looking to purchase a new tractor should look for first tier, established companies in order to ensure that parts and service will be available in the future. Leave the "up and coming" companies to someone else to roll the dice on. Many of these companies make nice tractors but that's not enough. A tractor is generally a long term purchase, much longer term than an automobile, and I want to be assured that I can get parts in the future to keep mine running. I can easily get any part needed for a 40 year old MF135, but will you be able to get parts for that kioti DK35 in 40 years? Doubtful in my mind. The upcoming trying economic times will most likely weed out a lot of the second tier players in the small tractor market. It'll become apparent why the advice to stay with well established makers is sound advice.

 

[albmn10]

Companies that produce most of their own epuipment will fair the best in tough economic times. Consumers are savy today and want the most tractor for their money.Compact sales may dip some but their will always be a demand for small compacts. Companies like Kubota and Kioti produce most of their own equipment and offer quality products for less then some of the other major players. The more middlemen in a company the harder it will be to stay competitive. Our current economic problems are being caused by the greed of the Oil industry and the greed of Wall Street manipulating the oil futures markets driving up prices. Oil consumption has dropped 3.2 percent from this time last year but the prices still go up.. Its time to change the guard in Washington and elect those who wont put their self interests first.

 

[jeepersmitty]

Companies that produce most of their own epuipment will fair the best in tough economic times. Consumers are savy today and want the most tractor for their money.Compact sales may dip some but their will always be a demand for small compacts. Companies like Kubota and Kioti produce most of their own equipment and offer quality products for less then some of the other major players. The more middlemen in a company the harder it will be to stay competitive. Our current economic problems are being caused by the greed of the Oil industry and the greed of Wall Street manipulating the oil futures markets driving up prices. Oil consumption has dropped 3.2 percent from this time last year but the prices still go up.. Its time to change the guard in Washington and elect those who wont put their self interests first.

Excellent post. I agree with you.

 

[woodlandfarms]

it is quite possible the economic downturn will help smaller outfits (TYM, Kioti as example). They are backed by large corporations who can help with weathering the bad times, and they can provide a decent tractor at a reduced price...

Nope, the next 2 years are not going to be much fun IMO, but who will really fail is up for grabs. Who ever thought Citibank would be on the verge of folding.

 

[Harvey7]

I can easily get any part needed for a 40 year old MF135, but will you be able to get parts for that kioti DK35 in 40 years? Doubtful in my mind. The upcoming trying economic times will most likely weed out a lot of the second tier players in the small tractor market. It'll become apparent why the advice to stay with well established makers is sound advice.

People asked that question of Kubota forty years ago and they're still around.

 

[Slackdaddy]

I have been looking at buying a CUT for the last year, it is a want, not a need. I think I will hold off at least 6 months and see what slightly used iron hits the market, currently people including agricredit want close to new prices for slightly used stuff.
I have serviced forclosed properties for the last 15 years, I was expecting this in 2004-2005, I never thought the boom would last this long.
This is going to get a LOT worse then the general public is aware of.
Those who lived a conservitive financial life will make it fine,
Those who where morgaged to the hilt, both spouses working 12 hour days , multiple car payments, loans out the wazoo, and squeeking by week to week with out putting away for a rainy day, Well You may be my next client

Slack

 

[chh]

People asked that question of Kubota forty years ago and they're still around.

Kubota came to the US market with the intent to stay. The question is, how many of the smaller brands are here to stay and how many are testing the market and will run at the first sign of a negative return on the margin sheet? Belarus tractors where hot a few years ago, how many new ones do you see now? Daewoo cars? Yugos?
At one point I never worried about the resale side of the equation and it is still not a primary focus of my buying decision, but it is a factor. I finally broke down and bought a new tractor instead of fighting old tractors in the mid 80's, a brand new 85hp or so Belarus cab/air, mfwd and a loader for in the low $20's. 10 years later I gave up on that peice of junk and traded it in on a MF because the MF dealer would give $7000 trade in for it and JD and CaseIH wouldn't give but $4000. The MF was a little cheaper to start so it made it a doable deal. But if I had spent $4000 more on a MF or near new JD to start with I wouldn't have needed to trade tractors and if I wanted to the tractor would have still been worth $18000 to $20000. Now I know many of the small brands are better built than the Belarus, but do they have the will and financial backing to stay? How willing are you to gamble on them? For me personally, I won't. I am from a largely farm and ranch area and many of the small brands have next to nothing in resale value in just a couple of years as it is. In urban areas the resale drop is not as drastic now, but how will it be if people have little or no discretionary income?
Just my take.

 

[BTI]

I doubt seriously the parts supply for compacts will be as good as the old MF's, JD's and Fords.
The compacts change every couple of years which makes it very hard to stock all parts.
There are also alot of different models, having to stock that many parts is virtually impossible.

BTI

 

[art]

When you step out of the US market many of the manufacturers don't worry to much about older tractors. Many of the european countries have more stringent environmental laws then us so they don't run many tractors past the 5000 hour mark before they get rid of them.

I've also seen that some of their parts after about ten years get extremely expensive if you can get them nearly making a tractor purchase cheaper.

 

[mboulais]

The big companies like John Deere, Case/NH, Agco (massey ferguson) etc. are all experiencing boom times right now. Large ag equipment sales are up quite a bit due to the high food prices. These guys will prosper in current times. Kubota will survive because they're a well established high quality brand with large market share even though they don't have any large ag equipment sales. They'll take a hit in profits but their mass will let them weather the storm.

The ones that will be hurt, as the above poster said, are the smaller companies focused on the CUT segment. The compact utilities are generally homeowner products and being fairly expensive they'll be the first discretionary purchases to be put off. Likely a lot of guys will sell their small tractors to get out from under the payments, driving down prices on the used market. For most people their small tractors are wants not needs. I'd expect the kiotis, mahindras (U.S. market at least), montana, branson/century, etc. to fare poorly.

This is typical misconception about who is big and who isn't. Mahindra will be #1 in world tractor sales soon. All the imports are making better money on the weak US dollar too.

YouTube - Mahindra stalks top tractor sales spot

 

[chh]

This is typical misconception about who is big and who isn't. Mahindra will be #1 in world tractor sales soon. All the imports are making better money on the weak US dollar too.

YouTube - Mahindra stalks top tractor sales spot

This has been hashed over before, you are comparing tractors only against the big companies that sell tractors, combines,implements ect. Mahindra isn't even close on totals sales volume. I'm not knocking Mahindra tractors as such, but there is no comparison. They don't even make a tractor size that is targeted at the US ag sector.

 

[turbo36]

This is typical misconception about who is big and who isn't. Mahindra will be #1 in world tractor sales soon. All the imports are making better money on the weak US dollar too.

YouTube - Mahindra stalks top tractor sales spot

Why would the imports make better money with a weak dollar?

 

[DavesTractor]

This has been hashed over before, you are comparing tractors only against the big companies that sell tractors, combines,implements ect. Mahindra isn't even close on totals sales volume. I'm not knocking Mahindra tractors as such, but there is no comparison. They don't even make a tractor size that is targeted at the US ag sector.

Well said, and I am a Mahindra dealer, but it does set Mahaindra apart from the rest of the non-major brands, By 2009 or maybe 2010, they probably will sell more tractors worldwide than any other single brand. While they will still be behind in total volume due to a smaller product line, it does make them a significant company.

As for me, I just try to make this point in a fair manner to set us apart a bit from all the other minor brands. Mahindra is ambitious and has deep pockets, and they are determined to be a major player in the USA, and part of that is what should give people confidence that they are here to stay. As some have mentioned, it is not just the ability to sell tractors in the USA, but the desire and determination to be a significant worldwide global company. If you aren't in the USA, you aren't global.

As a real tractor nut, I like to read books about the history of tractors in the USA and globally. It is amazing the amount of company mergers, failures, etc over the years. It is the norm, not the exception it seems, and sometimes these were huge companies with significant market share. This is not to imply that JD, NH, Kubota or others may fail. On the contrary, all indications are that they are rock solid and being managed well.

 

[Builder]

Our current economic problems are being caused by the greed of the Oil industry and the greed of Wall Street manipulating the oil futures markets driving up prices. .

You don't think our current brain dead energy policy or the falling value of the dollar have something to do with it, too?

Greed of the oil industry? Our American oil companies can't match the offer prices of Chinese oil companies bidding on the best oil drilling spots left out there. Maybe if our gov't would allow them to make the profits they need to compete for what remaining oil exploration is left out there, we might be able to secure more oil.

 

[Builder]

Why would the imports make better money with a weak dollar?

Yeah, that's confusing. In terms of domestic sales, if the dollar is weak, that would make it more difficult (expensive) for American buyers to buy imported machinery.

 

[art]

On a different note, a company that was used to out sourcing work to india and china recently found with the devalued dollar they could have the work done here cheaper!

Watching the differnent companies as they have grown in our market there also have been many that didn't make it. Long term parts and service are often what some companies have had trouble with. That is depending on the dealer network that they monitor. Some have had good success and some haven't.

 

[DGS]

Hello All
I have been around agricultural machines most of my life and have found that only the manufactureres that supply the best product,service, parts & warranties are the ones that are still standing today.
Granted a lot of companies have gone to the great acerage in the sky but that was also a part of many upturnrs downturns etc.
I do not like what I am seeing on the market today as there are too many manufacturers out there and not enough support for there products,and that is sad because a lot of there stuff is very good quality but without a proper distribution network they can't get off the ground.
the people buying these proudcts are the ones that get burned along the with the whole cycle of that product be it the machine itself or the parts that that they will need
I purchased my first machine in 1979, it was a International 1650 hydro with all the hydralics.
With the proper service it lasted me until 2005 when i bought the Kubota bx 1830 the reason being Cub did not have a compareable tractor in this class
Regards
DGS