New Brand of Tractors

[Builder]

Internet shoppers and TBN readers make up the vast, vast minority of tractor buyers. Remeber that 90% of this business is still tied up by Kubota, New Holland and Deere and a vast majority of people have never heard of Mahindra, Kioti, etc. We all visit a website that is plastered with their advertisments so they have become normal names here, but not in the market place. Its going to take a huge effort for LS to make inrodes into the market. Small import companies like this have existed for years and none have gained a nationwide market share over 10%, Mahindra has probably had the best regional success. There has been a market shift towards less expensive tractors, and your seeing the major players respond to that with more economey models (Kubota B3300SU, Std M's, New Holland 'Work Master', Deere e-series). You'll always have some pricing advantage by the less estabilished companes, but I don't see it adding up to enough to give them a real catalyst for growth that other companies have been unable to achieve.

It always has to be in the back of the mind of the buyer that their economy brand like Nortrac, Jimna, etc. will wind up being another Belarus, rusting behind a barn somewhere unable to get parts for. That's the disadvantage of being a new player with little dealer support. However, today's awful economic conditions give a Chinese, Indian or Korean company to become the next Kubota.

I remember buying my first Kubota L-245DT in the late 70's because they were the new kid on the block, cheaper than Deere. Some of you guys were still pooping in diapers back then, but it was the Jimmy Carter era and interest rates were high and there was little work. It was a great time for a new, well built player in the tractor market to take advantage of Americans looking for a gret value. It seemed like Kubota exploded in popularity from that time on.

 

[MessickFarmEqu]

I remember buying my first Kubota L-245DT in the late 70's because they were the new kid on the block, cheaper than Deere.

Most of Kubota's success came not from being a cheaper tractor, infact they where generally more expensive machines up until the last 10-15 years or so. Success came by bringing a product to market that really did not exist at the time. Its very difficult to build a business just by being cheaper, it takes innovation. Look at products like the ZD's, RTV's... wildly successful because of their overall value.. none are even close to being the cheapest. I don't see the market dynamic that allowed Kubota to explode like they have ever really happening again with compact tractors.

 

[TheGoose]

I feel that most people when looking to buy a tractor take into account several things when choosing. One of the top ones for me was "Will this Company be around 20 years from now? ". That is why I stayed away from any of the cheaper imports like Montana, Kioti, Branson, etc. I know they were supposedly cheaper, but I just didn't feel comfortable buying a tractor I might not be able to get parts for in 5 years. I think that a tractor is different than a car or such because they tend to stay with you or at least in your family a long time, so cheaper may not always be the selling point. For me, I chose the Kubota because I know they make a good tractor and they will be here 20 years from now in some form or fashion.

I think that the cheaper imports appeal to the disposable crowd. That is, they have a very specific task they need the tractor for and in x amount of years they will no longer need a tractor. So the tractor almost becomes disposable to them so price is their number one factor.

 

[Hematite]

Most of Kubota's success came not from being a cheaper tractor, infact they where generally more expensive machines up until the last 10-15 years or so. Success came by bringing a product to market that really did not exist at the time. Its very difficult to build a business just by being cheaper, it takes innovation. Look at products like the ZD's, RTV's... wildly successful because of their overall value.. none are even close to being the cheapest. I don't see the market dynamic that allowed Kubota to explode like they have ever really happening again with compact tractors.

Completely correct. Kubota succeeded by catering to a niche market that they actually created.

These Johnny come lately Chinese and Korean tractors offer no innovation. In fact, from what I'm seeing, they're offering old technology at a low price. There's no secret to that. I think that today's buyer is more informed and more interested in quality and the staying power of the manufacturer rather than what is the inexpensive flavor of the month that will not be able to be serviced with parts 10 years or so down the road.

 

[bluechip]

Old names don't necessarily mean future longevity. I remember a time when GM was the US largest corporation, now they are bankrupt and owned by their former creditors (and taxpayers of course). In recent years, I have seen the demise of brands like Plymouth, Oldsmobile, Pontiac, etc... Once big corporations are in control, anything is possible and the name on the hood may have little to do with the "heritage" of the brand. With so much outsourcing of components and even complete tractors, parts availability most certainly will not be the same on todays tractors in 20 years as they are today for 20 year old tractors. In todays market, I believe the dealer, and dare I say: specifications should weigh in as much as brand name. I used car companies as they are more contemorary, but thre are lots of former leading tractor companies that no longer exist or exist in name only on another manufacturers product.

 

[Builder]

Most of Kubota's success came not from being a cheaper tractor, infact they where generally more expensive machines up until the last 10-15 years or so. Success came by bringing a product to market that really did not exist at the time. Its very difficult to build a business just by being cheaper, it takes innovation. Look at products like the ZD's, RTV's... wildly successful because of their overall value.. none are even close to being the cheapest. I don't see the market dynamic that allowed Kubota to explode like they have ever really happening again with compact tractors.

Maybe in some cases, but I definately paid less for My L245DT than Deere. Then again, I think Deere didn't even have a 4x4 that small.....IIRC.

Oh well, I still remember thinking 5 grand was a lot for that tractor with an FEL. Those were the days.

 

[DieselnHooters]

Old names don't necessarily mean future longevity. .

Sure but i would feel relatively secure buying shares in JD or Kubota, timing may be wrong on them ?...not real good on timing the market.

I'd be less confident on most of these other names, sometimes u dont even know where these brand names lead to, ownership wise. On some others they are joint ventures between lesser industrials looking to diversify or venture capital in it for a quick gain.

To me the risk isnt worth the reward on a tractor I really need.

 

[MrChris]

You have to admit Korean companies have been making some very successful inroads into the US market. Look at the auto industry with Kia/Hyundai. Look at Samsung/LG in the wireless industry(cellular phones), the consumer electronics industry (tvs,dvd players, etc) and lately the appliance industry ( microwaves, refrigerators, washer and dryers) Who would have thought they would have gained so much market share so quickly in such competitive arenas. I don't think they are focused on anything less than a long term existence in the US.

 

[Gittyup]

Kioti has been in the U.S. market for more than 20 years. That's hardly "johnny-come-lately". If they are around another 20 years, I probably won't care as I will have gotten my use out of my machine. From what I have seen, Kioti (Daedong) is getting stronger these past few years. They might not be growing by leaps and bounds like Kubota did when they created their "new market". But, growing enough and investing enough to remain viable. I think this trend will continue to the point that everyone's market share becomes more diluted. This is exactly what has happened to the auto industry.

 

[Diamondpilot]

Kioti has been in the U.S. market for more than 20 years. That's hardly "johnny-come-lately". If they are around another 20 years, I probably won't care as I will have gotten my use out of my machine. From what I have seen, Kioti (Daedong) is getting stronger these past few years. They might not be growing by leaps and bounds like Kubota did when they created their "new market". But, growing enough and investing enough to remain viable. I think this trend will continue to the point that everyone's market share becomes more diluted. This is exactly what has happened to the auto industry.

You are 100% correct. Look at the auto industry 20 years ago and who dominated. Now look who dominates and the new brand lines being sold and doing very well. Companies never heard of or in very limited numbers. People demand choices. Value, simplicity, and a product the people wanted won out that battle. We will all have to wait to see who wins the war???

Chris