Will all the brands survive ?

[coobie]

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

IMHO Mahindra makes a very nice tractor I almost bought one.What they lack at the main headquaters in tomball texas is customer service.If they intend to be a big player is the US market they need to deliver better customer service.coobie

 

[john_bud]

Well, since all (yes ALL) tractors sold in the USA at 45 hp and under are imported, they will ALL cost more as the value of the dollar drops.

Dropping dollar makes oil cost more, makes imports cost more, but makes us a better place to export from.

I do find it funny that the folks in politics that whine about high prices at the pump are also the ones that want lower CO2 emissions, lower fuel consumption etc. Now that they have it, they whine. Typical.

jb

 

[GaryCrowell]

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

Mahindra might sell a lot of tractors, but they're not a player in the agricultural equipment market. Ag equipment is what's experiencing a boom right now, the small tractor market (where mahindra is solely located) is what's going to take a hit in the U.S.

Mahindra sells a lot of tractors to third world countries and that's not where the money is located. I'd imagine most of their volume is from cheap, no-frills tractors that don't bring a lot of profit. Mahindra worldwide will probably do OK, but it's U.S. division will take a big hit with the upcoming hard economic times due to the fact that they only sell homeowner machines.

 

[D7E]

Farmers have to buy machinery from time to time regardless of current prices and will always favour mainstream brands ...Ford NH,JD,Case IH,MF.....?

 

[Farmwithjunk]

Better chance than not a few will fall by the wayside as things get worse. And times will get worse. The fall has just started with no sign of the decline slowing yet. Homeowner/"ranchette" tractor markets will take a harder hit in the near term than AG markets, but in due time, that will likely slow too.

Keep in mind that MOST of our concerns are based primarily on US markets and US economic conditions. Granted the WORLD economy is in turmoil, but a couple major markets are currently eating up tractors. (China/India) Times like today are why all the big players started "globalizing" decades ago. It's the ol' "Don't put all your eggs in one basket" theory put to the test.

20 to 25 years ago, the farm industry went through some of the toughest times since the great depression. The 80's took out a BUNCH of what were perceived as strong companies along with a great many "successful farmers". The equipment market was flat for years after because production of equipment prior to those times was at such a high level, the economic downturn left a glut of used late model tractors, combines, ect, that served as competition to the new market for years to follow. Several big players dried up and went away, or were in such dire straits, they ended up selling their "name" to a handful of brands who had the assets and good management to hang on. THAT's what it will take now. GOOD MANAGEMENT. The comment was made earlier in this thread how only the producers of the "best" equipment will make it. While that may be true to some extent, it isn't a lock. International Harvester was arguably one of the 2 "best in the business" when the 1980's and bad management teamed up to bring them to their knees. About 1975, if you would have walked into any meeting of farmers and said that in 10 years IH was going to be selling off what's left of a broken company, you would have been laughed right out the door. But that happened.

For the near future, it won't be so much about growth as it will be about survival skills and adaptation to changing times.

See y'all back here in 20 years to take stock of who survived and who didn't.

 

[Soundguy]

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

I doubt we will loose any in the immediate future.. but as time has shown.. even major brands do go away.. or merge.. etc.

Looking in the recent past.. look at farmtrack.. 2ys ago I would have thought they'd be here for a while..

soundguy

 

[Builder]

My guess is the Chinese players go first. Here's my reasons:

1.Weakest dealer networks
2.Falling value of dollar to Chinese currency will increase Chi tractor prices
3.Used tractors in the size range they build will be inexpensive, attractive alternatives
4.Chinese farmers need all the tractors they can get

 

[DavesTractor]

Mahindra might sell a lot of tractors, but they're not a player in the agricultural equipment market. Ag equipment is what's experiencing a boom right now, the small tractor market (where mahindra is solely located) is what's going to take a hit in the U.S.

Mahindra sells a lot of tractors to third world countries and that's not where the money is located. I'd imagine most of their volume is from cheap, no-frills tractors that don't bring a lot of profit. Mahindra worldwide will probably do OK, but it's U.S. division will take a big hit with the upcoming hard economic times due to the fact that they only sell homeowner machines.

Mahindra goes to 75 HP which gets a few on the farms, but it is true that they are not yet into the big equipment. I don't know if they have plans to go much bigger than 100HP. I know they will have a 85HP machine this year.

Having big ag machines would give them more diversity and that normally helps. They have diversified in another way though, they have their SUV and pickup division, medium duty truck division, IT division, Resorts and Properties division, financial sector, etc. They are spread out some some, they don't have all their eggs in one basket. As such, all they need is resolve to stick it out if they end up with a decline in the smaller machines. They have that resolve, that is clear to me.

 

[billbill1]

If he economy continues on a downward spiral, people won't be purchasing tractors and in fact the market could be flooded with used machines as people lose their property. Lots of things can fold in these situations. The price of transportation could drive people back to the cities and off of the small acre plots that they are living on now. A huge mortgage and no job can cause more problems than tractor ownership and who will survive and who won't. Like Bill (FWJ), I saw many farms fold in the 80's that were paid for at one time. New equipment was bought against the land and the land was forclosed on. Too early to call right now but many brands could be in trouble before things gets better.

 

[Builder]

I agree. If you're making money in these times, there's going to be some great deals out there. Lots of property is coming on the market and it's going for prices well below what it would have sold for 2 years ago.

 

[DavesTractor]

It just depends on how bad things get. Our 1st qtr 2008 is slightly up over 1st qtr 2007, but I really don't expect that year end 2008 will be better than year end 2007. This is for our own dealership, I'm not speaking for Mahindra, I don't have access to that info.

We are seeing more buyers with cash. People that have saved money over the years. They often take advantage of the 0% financing, but could write a check for the entire purchase. We are seeing way less of the impulsive buyer. I miss that impulsive buyer.... .

 

[DavesTractor]

I agree. If you're making money in these times, there's going to be some great deals out there. Lots of property is coming on the market and it's going for prices well below what it would have sold for 2 years ago.

Back in 1973 and 1974 my dad had an RV Sales business, then the bottom dropped out due to the oil crisis. He waited for it to get near bottom and then started buying all the motorhomes and trailers he could at 25 cents on a dollar. He held them for a year or so, and doubled or tripled his money. It was a gamble and it required some working capital, but what a deal!

 

[MessickFarmEqu]

Not sure if this thread was related to this... but FarmTrac just went belly up. I found it interesting that no one pointed this out yet.

This market has seen 7-8 years of constant growth, even with that we've seen companies like Brandson faulter. If things start to slow futher there is no question that your going to see companies who are not moving volumes of equipment closing up shop. Many of the small companies only move a few thousand units a year. Its got to be very difficult to cover the overhead operations in this country with minimal sales. I would not expect to see complete forclosures, but its more likly to see them stop doing business in the US and push in other emerging markets. Some tractor companies are publicly traded. Someone recently looked at the financials of Daedong (Kioti) and found some very real reasons for concern. I am sure you could do the same with some others as well, it would be an interesting read. Beyond someone doing that work naming names would only be speculation.

 

[Soundguy]

FarmTrac just went belly up. I found it interesting that no one pointed this out yet. .

Hey.. now why didn't I think of that 1 page back! ( post # 26 )

soundguy

 

[DavesTractor]

This market has seen 7-8 years of constant growth, even with that we've seen companies like Brandson faulter.

Neil, I've seen you post about Brandson (sic) a couple of times and I don't get it. I'm also a Branson dealer and the company seems healthy. Am I missing something? I know Mark and Russ sold to Kukje (Branson Korea) so it is no longer locally owner, but that actually make the distribution stronger, not weaker. Let me know what you know, thanks.

 

[MessickFarmEqu]

Neil, I've seen you post about Brandson (sic) a couple of times and I don't get it. I'm also a Branson dealer and the company seems healthy. Am I missing something? I know Mark and Russ sold to Kukje (Branson Korea) so it is no longer locally owner, but that actually make the distribution stronger, not weaker. Let me know what you know, thanks.

My point was that these are not stable companies... thats all. Your absolutly right that the change probably makes the distribution stronger.

 

[NEFirewood]

Mahindra sells a lot of tractors to third world countries and that's not where the money is located. I'd imagine most of their volume is from cheap, no-frills tractors that don't bring a lot of profit. Mahindra worldwide will probably do OK, but it's U.S. division will take a big hit with the upcoming hard economic times due to the fact that they only sell homeowner machines.

When I was in South East asia a few years ago, little tiny tractors were all over the place. I mean, I would drive by a farm and there would be fleets of these tiny tractors working in boggy fields. Not a John Deere or New Holland nameplate in sight anywhere. But all the Japanese brands, Mahindra and others all over. Personally, having been there in person, it's definitely not the third world anymore. Sure there's depressed areas, run down and dirty, just like there are in the US.

But for them it's way cheaper for farmers there to buy a cheap little tractor and use manual labor. Besides, 1/2 of the earths population is in Asia, the US is just a teeny fraction of the marketplace. I've been to shopping malls in Asia that dwarf anything in the US. That much capitalism is pretty hard to call 3rd world.

 

[mboulais]

Mahindra might sell a lot of tractors, but they're not a player in the agricultural equipment market. Ag equipment is what's experiencing a boom right now, the small tractor market (where mahindra is solely located) is what's going to take a hit in the U.S.

Mahindra sells a lot of tractors to third world countries and that's not where the money is located. I'd imagine most of their volume is from cheap, no-frills tractors that don't bring a lot of profit. Mahindra worldwide will probably do OK, but it's U.S. division will take a big hit with the upcoming hard economic times due to the fact that they only sell homeowner machines.

I disagree that the small tractor isn't booming. Everytime I travel a different stratch of road around here I spot a few more tractors under 70 hp, including on farms. There are more people with a tractor in rural ny than without. The montana dealer just north of me is selling around 15-20 units / yr. Not bad considering there are JD(2),CASE, MF, Mahindra, and branson dealers within 70 miles of him. I think all of them are selling quite a few tractors.

 

[MessickFarmEqu]

I was emailed this recently... here are some changes that happened in just the last month.

1. AGCO branded compact tractors were discontinued
2. New Holland - updated horsepowers on several T models
3. Ditch Witch and Vermeer both companies have withdrawn from the excavator market
4. John Deere - added new narrow, orchard, and vineyard models sourced in Italy.

So I guess we can add AGCO as another company who has pulled from the compact tractor business. No big deal for customes, as they still sell those models under their other brands. Just more proof of the kind of shakeups that I think we are going to be seeing in the not too distant future.

 

[WilliamBos]

I was emailed this recently... here are some changes that happened in just the last month.

1. AGCO branded compact tractors were discontinued
2. New Holland - updated horsepowers on several T models
3. Ditch Witch and Vermeer both companies have withdrawn from the excavator market
4. John Deere - added new narrow, orchard, and vineyard models sourced in Italy.

So I guess we can add AGCO as another company who has pulled from the compact tractor business. No big deal for customes, as they still sell those models under their other brands. Just more proof of the kind of shakeups that I think we are going to be seeing in the not too distant future.

Well I am not sad to hear that. I am glad they did that, because they are focusing on making MF the number #1 brand, and by chopping the AGCO compacts, that is less in house competition. From what I understand the Challanger compacts are aimed at Fleet rental places?