new interest rates favor

[Archdean]

Kubota just published their new financing rates through 2005 quick glance seems to favor Lawn Tractors and M's check it out for yourself.
Kubota rates tioo 2005

 

[Bob_Skurka]

I expect to see more companies follow suit. The Federal Reserve has raised rates twice, leading to the Prime Rate increasing twice. It is expected to go up again at the November Federal Reserve meeting (conveniently held after the elections). The smaller machines cost less, leading to lower financing total dollars. The larger machines cost more, financing rates have to cover the added exposure over time, and it is predicted that the Fed will continue to raise rates by 0.25 basis points each meeting for possibly the next 4 quarterly meeting, or perhaps 4 of the 5 upcoming meetings which would yield a full 1.5% increase in interest rates in about 18 months.

 

[KENSFM]

</font><font color="blue" class="small">( It is expected to go up again at the November Federal Reserve meeting (conveniently held after the elections).)</font>

Bob, I believe the next Fed meeting is September 21, which would make it BEFORE the elections.
Ken /forums/images/graemlins/smile.gif

 

[Bob_Skurka]

I believe they are meeting but not proposing an increase. The analysts I track, any my bankers, are saying that they will vote an increase in November. Then probably 3 more times over the next 3 to 5 meetings.

 

[5030]

That's interesting. I am in the early stages of finalizing on an M105SA. I really want a closed end lease as I intend to write off the tractor anyway. I believe the 105 will lift the 5030 in the FEL.

 

[Rolando]

Well that's good. Since they're not providing 0% for 36 months anymore, I won't have the temptation to buy more equipment up-front to take advantage of the 0% financing. Spread over only 24 months, the monthly payments become substantially higher.

But I don't believe they are raising the rates because their cost of money is rising, I think it's because they must feel they don't need to give as much incentive to maintain an acceptable level of sales. I don't believe the cost of money for Kubota has much to do with the Fed rates or banking rates here. We're talking about a Japanese company here and their financing sources would be coming from Japan. Unless things have changed a lot since I last read about the this, the interest rates in Japan are practically zero, that's one of the reasons Japan had so much trouble getting there economy going, because they had no fiscal stimulus to apply because they couldn't drop interest rates below zero. My point is that Kubota's cost for providing zero financing can't be very much.

 

[MessickFarmEqu]

Kubota as we know them here is a very American company. Kubota Credit as well as the US corporate offices are located in Georgia. They have a very regional structure with product lines and corporate images that are radicaly different in other countries than what we know them as here.

The changes in interest rates is a seasonal adjustment, they are much more aggressive going into the heavy buying season than they are in the off season. Its cylical and happens pretty much every year. I do agree that they make some rates decisions based upon what they need to offer to be competitive. The RTV is a prime example, no one can touch that right now so they are not about to offer top notch programs for it.

 

[Junkman]

Neil..... since you work with Kubota and are familiar with their policies and practices, possibly you could answer this question that I asked last week?????? thanks Junk.

my question ....

 

[MessickFarmEqu]

I never saw that post...

Believe me, I think exactly the same way as you do, but on this side of the fence I gotta side with other dealers and give them the benifit of the doubt. Their costs are going to be higher because of their location, and if they are not moving a volume of units they may need that margin to cover their costs. In retail its up to the dealership to set their pricing where at a point they think will make them the most profit. Apparently in the North East they are more concerned with selling at low volume/High margin and are loosing their internet savy customers to guys like me. I DO NOT work for a typical dealership so I can't really understand why they price like they do. I am defentialy part of the "New School" of thought when it comes to this kinda stuff.

As for the Kubota, and NH websites... I have expressed my disappointment many times over the lack of infomation both on the website, and in my own dealer publications. Those companies choose to spend their money on products and engineering vs another<font color="green"> manfacturer </font> thats starting to base itself on its marketing rather than its products. None the less, they could do better.

 

[Junkman]

Do identical tractors start off with the same price to the dealer no matter where in the US the dealer is located? I would assume so, and then they add on the cost of transportation? Does Kubota have a discount for volume dealers in the form of rebates for number of units sold? If we could better understand how the pricing is done on the wholesale and retail level, then we would have a better understanding of what the dealers need to make for a profit margin. Then the "thought" that it is price gouging might change to it is "priced so they can survive". Thanks for the reply....