New Tractor Sales Are Declining

[PreacherM]

Isn't it funny how all the manufacturers and the oil and gas companies have all their excuses of how they HAD to raise prices to survive, yet they have all been posting RECORD PROFITS since covid began.

I agree it is ironic. Yet it's also true that minimum wage is at a RECORD HIGH. that means everyone making minimum wage is getting rich, correct? What percentage did these profits increase? Then compare that with the increased cost of building a new factory or purchasing some oil drilling equipment.
My business income has increased 30-40% over the past 2 years. That sounds great until you compare it with everything else. (I do realize I'm still left in a pretty good situation, and I'm thankful.)

 

[jyoutz]

I agree it is ironic. Yet it's also true that minimum wage is at a RECORD HIGH. that means everyone making minimum wage is getting rich, correct? What percentage did these profits increase? Then compare that with the increased cost of building a new factory or purchasing some oil drilling equipment.
My business income has increased 30-40% over the past 2 years. That sounds great until you compare it with everything else. (I do realize I'm still left in a pretty good situation, and I'm thankful.)

All true, but the petroleum industry record profits are after expenses. Record profits, not just record earnings.

 

[Cahaba Valley Farm]

Standard procedure for car repos is to call an independent specialist who will tow the car without starting it to a regional auction house for resale.

The repo procedure for a tractor could be very different. It could be stored in a locked barn. It has to be started and loaded on a trailer or truck. I don't know of any tractor auction where dealers can bid against each other to buy repo tractors for resale.

So....how does Kubota credit repo and sell tractors when the customer doesn't pay them?

2many, great question. I have wondered the same thing myself. Don't have an answer but I would love to know if anyone else around here does.

 

[Torvy]

A big part of that is that oil companies are not investing their earnings into exploration as they did prior to being told they were going the way of the dinosaur.

It is rather like a rancher selling off the vast majority of their herd. Not best for the long term, but it will show record profits.

While it may seem like it, companies don't set prices, the market does. If the prices are too high people stop buying and competitors increase production and prices fall. If prices are too low, people buy up the supply (or companies cut back production or change products) and prices rise. Tractor prices are high because people pay them. Oil prices are high because people pay them. Supply and Demand always set the prices (even in a world where authorities mandate prices, the underground economy will grow to fill the void).

 

[Cahaba Valley Farm]

Tractor prices are high because people pay them.

This remains to be seen. In my market they aren't going anywhere.

 

[Cahaba Valley Farm]

Starting at 13:00 minutes into this video Tim talks about consolidation of tractor brands and how the number of tractor vendors this year at the show is way down from what it was in years past.

 

[Torvy]

I watched that earlier today. The important part is that TYM is growing stronger and they specifically pointed out that the Branson units are not going away anytime soon.

When the economy tanks, people tend to buy substitute goods. Lower priced brands tend to do better than the pricey ones in hard times... as long as they have the ability to produce.

Just a note, my comment about people pay them is generic. When people stop paying them prices fall. If prices haven't fallen, someone is paying. Wealthier brands may hold out longer hoping to ride it out. Doesn't matter if it is tractors or donuts.

 

[WM75Guy]

Deere doesn't seem to have trouble selling products. The local dealer has a lot of inventory on the lot.

Deere earnings double and sales rise on higher production

The world’s largest seller of tractors and crop harvesters is now expecting higher earnings for the year after reporting a profit of $1.96 billion for the quarter ended Jan. 29.

www.foxbusiness.com

 

[airbiscuit]

The most interesting question posed in that video is if TYM will continue to offer 68 different models?

 

[Torvy]

It will be Interesting to see about JD. There is a huge difference between the AG tractor and big machinery business and the CUT/SCUT business that most of us engage in. Big stuff tends to get government contracts and is insulated. I would like to see the data over the next couple of years only in the CUT segment.