R N Johnson, Walpole, NH Losing John Deere

[ctlguy]

wdchyd, just to play devils advocate here. The last two years have been record breaking years for many tractor dealers. In spite of what is happening economy wise, too many are growing at an astounding rate. Again not saying this ws right just a different perspective, I still think there is more here than just MFG-bad, Family-good. But then again if they don't have a good ag area they may have struggled.

 

[mjncad]

IIRC, there was some scuttlebutt on the news about car dealers being forced to remodel their showrooms and facilities during hard times.......I often wonder if John Deere and other tractor mfgrs are pushing the same train to force these small dealers to become megastores.....:confused3:

I'd say it's a safe bet that Deere is forcing dealers to remodel to present a unified corporate appearance to the public. Around here the Deere dealers regardless of ownership have the same style signage by the road. Unlike Honda, BMW, Toyota, et al; Deere isn't requiring the dealers to turn their buildings into Lexus quality showrooms...yet. Deere is no doubt in my mind wanting to make sure in the public's mind that they are a premium brand and don't want their products being sold out of barns with trailers like I've seen the Montana, Branson, and Kioti marques are/were in my area. The newest Kubota dealership is catty-corner from my Deere dealer, and they built a brand new building, which probably was required by Kubota as part of the franchise agreement. It's a nice building, and is the only tractor dealership I've been in that comes close to looking like a car dealership.

 

[AKfish]

I'd say it's a safe bet that Deere is forcing dealers to remodel to present a unified corporate appearance to the public. Around here the Deere dealers regardless of ownership have the same style signage by the road. Unlike Honda, BMW, Toyota, et al; Deere isn't requiring the dealers to turn their buildings into Lexus quality showrooms...yet. Deere is no doubt in my mind wanting to make sure in the public's mind that they are a premium brand and don't want their products being sold out of barns with trailers like I've seen the Montana, Branson, and Kioti marques are/were in my area. The newest Kubota dealership is catty-corner from my Deere dealer, and they built a brand new building, which probably was required by Kubota as part of the franchise agreement. It's a nice building, and is the only tractor dealership I've been in that comes close to looking like a car dealership.

Unfortunately, the tractor-buying public that were hoping to buy "Green" will see their bargaining power eroded with the market-share consolidation of the "local store" dealerships into "mega-chains". At least in the short term... until more folk's begin to buy tractor's from other manufacturer's.

IIRC - the market for SCUT's, CUT's and lawn tractors is nearly a Billion dollars, annually in the U.S. I don't know what share of that market is Deere's percentage... but, I'd guess it's pretty substantial. That said, the Ag sector - nationally and internationally - must be many, many times that figure.

Maybe Deere will eventually get "bored" with the "spare change" tractor markets and cede that ground to Kubota, etc. In the long term; that might be a much better situation for the consumer.

AKfish

 

[BlackRaptor]

I know in Albert lea MN Erlandson's was one of those small shops, two locations only a few sales people. Good people had that small shop feel.
Deere put pressure on them and they ended up combining or being purchased by Mankato Equipment. Not sure how the change really took place. Upside is they pretty much left them alone as a dealership and they still have the small shop feel and are great to work with.

AG Power Enterprise in Owatonna MN is one of those Mega stores its flat out huge. the showroom looks like a Deere toy store with 5000 series tractors skid loaders mowers and CUTS on the floor and about every Deere nick nack you can think of. Its fun to visit but they seem too focused on the big sales i felt very overlooked when i visited there. I had a hard time even getting help and my questions answered. I'm guessing they thought a 30 year old could not afford a 3x20 series cab tractor and i'm just tire kicking. Even the prices where higher on machines. When i went to get my 2520 back in 08 I was 25 AG power guys even than wouldn't give me the time of day went to Erlandsons's in Albert Lea and got it. But for giggles i figured i would return to AG power and their awesome new superstore to look to trade the 2520 off for a 3320 cab. After i finally got help the trade in difference between AG Power and Erlandson's was big than the base price through AG power was higher too. needless to say I'll do ALL my purchasing from Erlandsons's where i get treated like a customer even if i'm not buying a 250K tractor.
I guess i said all that to say bigger is not better and less dealers we have around the more prices go up and the less willing they will be to deal on their price. less competition is bad for the CUT buyer. Big Farmers still have good pull but us little buys do not.

 

[traveling fisher]

US Car manufacturers ceded the ground for small cars to the Japanese many years ago. How did that work out? I don't think Deere is interested in ceding anything.

 

[vtsnowedin]

IIRC - the market for SCUT's, CUT's and lawn tractors is nearly a Billion dollars, annually in the U.S. I don't know what share of that market is Deere's percentage... but, I'd guess it's pretty substantial. That said, the Ag sector - nationally and internationally - must be many, many times that figure.


AKfish

I don't know about that. My brother-in law was a JD salesman back in the '90s and even back then he sold more lawn and garden then they did Ag. There were a lot more working dairy farms back then but now for every working farm there are a hundred suburban houses and every one of those houses has some sort of lawn mower. Its different in the corn belt of course but there are a lot of SCUTs and CUTs up and down the I-95 corridor. Perhaps somebody has JD company annual report figures that break it down.

 

[sixdogs]

Fewer dealer owners controlling more stores and more stores controlled by a single dealer equals less competition and that equals higher prices. It's that simple and sound business thinking but also the same sort of thinking that helped make Kubota the giant it is.

 

[ctlguy]

I don't know about that. My brother-in law was a JD salesman back in the '90s and even back then he sold more lawn and garden then they did Ag. There were a lot more working dairy farms back then but now for every working farm there are a hundred suburban houses and every one of those houses has some sort of lawn mower. Its different in the corn belt of course but there are a lot of SCUTs and CUTs up and down the I-95 corridor. Perhaps somebody has JD company annual report figures that break it down.

That would probably be correct if you did not have to sell literlally (sp?) hundreds of mowers to come close to the revenue on 1 piece of harvesting equipment. AKFish is probably correct the ag side totally eclipses the compact world. But is large enough that I don't see them dropping it. You also have to think about world wide demand and in developing countries many people don't have lawn mowers and other toys that many American's are afforded. And again none of us know, or atleast have posted here, what the market potential was for this dealers area. I bet anyone with a few shares of stock has seen the annual reports but I highly doubt it would be detailed enough to break down between geographic areas in the US. But most certainly would show revenue for compact equipment vs ag vs golf vs construction etc.

 

[vtsnowedin]

No B.I.L .was talking dollars of commisions not units. But your right overseas people don't buy $30K lawn mowers. I read somewhere that JD sold 75,000 tractors in India which is why the 50xxd and Es are made there.

 

[vtsnowedin]

I was talking to a friend that has done business with RN Johnson recently and he says that he for one will not miss them. Seems a simple job that should have taken a couple of days took three months.
I wonder what the "Rest of the story" is?