What's really going on in the machinery business?

[Jim Bullock]

I just wonder how many machinery dealers will be able to weather the present storm.? If you look at the portfolio of second-hand kit available from some of the big dealers I would have sleepless nights worrying how to divulge myself of it... The only benefactors will be the finance companies who underwrite not only new but second hand kit sitting in dealers yards.
Its a bit worrying that the likes of JD and AGCO are reporting dramatic drops in sales (15-25%). I suppose the UK is hardly worth a mention about in global terms but with barley at around £90/ton and wheat at circa £100/ton for harvest 2016 who is going to be investing in new kit in 2016.?

 

[Clive]

I can see some big price adjustments coming or a lot of dealerships disappearing frankly

 

[DrDunc]

I can see some big price adjustments coming or a lot of dealerships disappearing frankly

Without big upward farm gate price adjustments, a lot of farms will go the same way.

 

[CrevisbigX]

When mentioned about price cuts to a local rep just turned around and said it does not work like that.

 

[Clive]

Without big upward farm gate price adjustments, a lot of farms will go the same way.

even if they do someone will farm the land - they will still need kit to do that

I would say most farms can go a lot longer without buying any new machinery than any dealer can last without selling any

 

[sleepy]

So where are all these cheap tractors and machines then?

 

[Clive]

So where are all these cheap tractors and machines then?

i bet i could buy cheap used combine right now, some must be desperate for a bit of cashflow

I doubt new prices will fall but if they want to move the tonnes of used stock thats sitting about then something has to give eventually

price is usually set by supply and demand - right now supply significantly exceeds demand I reckon?

 

[quattro]

I just wonder how many machinery dealers will be able to weather the present storm.? If you look at the portfolio of second-hand kit available from some of the big dealers I would have sleepless nights worrying how to divulge myself of it... The only benefactors will be the finance companies who underwrite not only new but second hand kit sitting in dealers yards.
Its a bit worrying that the likes of JD and AGCO are reporting dramatic drops in sales (15-25%). I suppose the UK is hardly worth a mention about in global terms but with barley at around £90/ton and wheat at circa £100/ton for harvest 2016 who is going to be investing in new kit in 2016.?

Maybe obvious but why will finance companies be the only benefactor
Jd won't go drop new prices by a chunk because their dealers will never sell all their x hire /stock tractors they have sitting

 

[PSQ]

When mentioned about price cuts to a local rep just turned around and said it does not work like that.

The directors have two choices: price cuts or job cuts.

 

[jonnieboy]

How are prices at farm sales ? seem to be plenty advertised all the time
Bit off topic but has anyone seen "By instruction of the receiver" on a farm sale ad ?

 

[Drillman]

When mentioned about price cuts to a local rep just turned around and said it does not work like that.

Give it time and they will come down. If the dealer needs the money selling at a loss is better than not selling at all. same as ag commodities.

 

[PSQ]

even if they do someone will farm the land - they will still need kit to do that

The sensible approach would be to fallow it through crap prices, while watching the Quadtrack and Lexion brigade farm themselves into the ground. These guys are up to the eyeballs with rents and payments on kit, that they don't have any alternative but to 'toss off' another crop 'just in case the price goes up'

That debt on that stupendous business model won't service itself...

 

[Marsh lad]

How are prices at farm sales ? seem to be plenty advertised all the time
Bit off topic but has anyone seen "By instruction of the receiver" on a farm sale ad ?

Went to a sale at thetford today and things were making silly prices,
You wouldn't think wheat was £100/ton that's all I will say.

 

[quattro]

It's not necessarily the dealer that's at fault for prices coming down we hold on to grain hoping prices will go up there maybe hoping they'll get the price they want for that machine they have sitting

 

[rich8100]

Nearly all new machines get taken by contractors. And its a finance set up that means the dealers make money.

And they know the contractor will be back in 3-5yrs to chop it in to get more new machines on finance.

And of course the now old machines will be sold off either at price to pay the remaining left on them or just to move them on.

Lets face it a price machine drops quickly once it leaves the dealers forecourt.

So although there may be a large number of used machines for sale at what seems a reasonable price, there are contractors, both agri and building such as highways getting the new shiny stuff.

 

[bluegreen]

Which dealers will be under the biggest pressure I wonder.........................Our local AGCO dealer literally has no less than 15 Challengers parked in their yard and the majority are trade ins, that's a million pound plus of machines that have no obvious homes to go to!!

Claas must have a huge number of expensive secondhand Lexions sat in their various dealerships....................I just hope they don't bank with Deutche bank as they appear to be sinking fast according to Zero Hedge.

Many Deere dealers are loaded up with huge amounts of ex hire tractors as has been mentioned and lots of secondhand big 7 and 8000 series tractors.
Export markets appear flat for a myriad of reasons that wont be solved anytime soon.

And seeing as the world has just embarked on a huge downturn that thankfully the UK has so far avoided, I don't see machinery sales booming anytime soon..............there will no doubt be more dealership mergers on the way.

 

[Simon Chiles]

I can see some big price adjustments coming or a lot of dealerships disappearing frankly

The price of new kit will never come down, you'll just get better terms. It's the way it works.

 

[Drillman]

Heard a rumour yesterday that my local single branch Massey dealer had been bought out.

 

[Clive]

The price of new kit will never come down, you'll just get better terms. It's the way it works.

I don't see new prices falling - its the acres of used stuff I reckon has to come down to find homes

 

[Drillman]

The price of new kit will never come down, you'll just get better terms. It's the way it works.

The manufacturers can go on a go slow, 3 day week or whatever to match supply and demand but the guy with a big yard full of unwanted used stuff, no cash in the bank and no customers is in the sh!t.

edit @Clive beat me to it.