New Tractor Sales Are Declining

[Cahaba Valley Farm]

This is about the third straight quarter that tractor sales have been on the decline. As mentioned last year, I believed the huge surge in compact tractor sales was tied to the overheated housing market and once that popped we would see demand sharply fall. My father has also reported seeing Kubota commercials running on television a lot lately which is very unusual given the time of year and where we are located in the country. My best advice to anyone considering the purchase of a new tractor is to sit and wait it out. If this trend continues we could see some real bargain buys coming next year.

Here is a video from a guy that has been covering this since the start of the year. This most recent video is his best to date.

 

[ArlyA]

Good post.

 

[Jstpssng]

Everything is tanking. It was to be expected though, no surge lasts forever.

 

[Hay Dude]

Pretty obvious any large purchase items, tractors, trucks, boats, sports cars, vacation homes, etc is tanking BIG TIME.
With interest rates in the 8’s, over 1/2 the market (financed buyers) is now moved to the sidelines.
With that go all the jobs, subcontractors, support people, parts, etc.

Unfortunately, our current 41 year-high rates come with another expense- HIGH interest rates.

 

[Torvy]

I watched this yesterday. He does of good job of explaining that sales are essentially where they would have been without the surge of sales during covid. There was an out flux of people to the country and they bought tractors. There were also people getting ahead of inflation, so they bought before prices went up. Thirdly, people who had income during vivid and time on their hands often chose to buy durable goods, in some cases, those were tractors. The actual 'drop' will be coming as inflation and rising interest rates continue to hammer away at the economy.

It would be fortunate for me if prices dipped a bit in the next few months. Delays have us still a minimum of 6 weeks out before the garage is up. Tractor purchase will follow soon after, barring unforeseen issues.

 

[ArlyA]

Seems that many products folks have purchased over the past 2 or 3 years will slow down in sales now.

 

[Cahaba Valley Farm]

Unfortunately, our current 41 year-high rates come with another expense- HIGH interest rates.

Yeah but with high interest rates comes another opportunity for people who have capital to invest.

 

[Cahaba Valley Farm]

It would be fortunate for me if prices dipped a bit in the next few months. Delays have us still a minimum of 6 weeks out before the garage is up. Tractor purchase will follow soon after, barring unforeseen issues.

Torvy, if you can afford to wait until next year I think you will find some deals.

 

[5030]

Kubota is STILL at 0 percent interest....lol

 

[jeff9366]

Tractor Mike makes some broad speculations from the data he displays.
Tractor Mike may be right. He may be wrong.

I will offer an alternative speculation concerning primarily <40-horsepower tractors.

Kubota, the dominant brand in the <40-horsepower tractor category, has been unable to meet demand for Kubota tractor Front End Loaders (FELs) for more than two years. Somewhere around 90% of <40-horsepower tractor were purchased with Loaders during the pre-Covid period 2014-2019.

I speculate that the major part of the decline in unit sales of <40-horsepower tractors is because of the domionate player's inability to deliver product: i.e. Kubota Loaders.

Is Kubota losing <40-horsepower tractor market share to other tractor brands? YES, UNQUESTIONABLY.

Are many Kubota customers waiting patiently/impatiently for delivery of Kubota FEL equipped tractors? YES, UNQUESTIONABLY.

This may also explain the relative strength of tractor sales >100 horsepower, few of which are sold with Loaders.


The larger question to me is why the twenty-year relative strength of the US Dollar, versus the Japanese Yen, has not decreased Kubota prices. Most <40-horsepower Kubota tractors would be around 60% Japanese production content by value.

Time lag until higher cost production inventory is sold? Transportation costs? I do not know.

June 3, 2022 / Tractor Brands Market Share​

Nothing would surprise me about tractor sales numbers in 2021, a sales year distorted by Covid-19. Whoever had tractors, sold them.

I think one reason Kubota was down was Kubota's decision, perhaps forced, to prioritize parts deliveries over whole tractor assembly. Mahindra did the opposite. So the parts man at my local Kubota/Mahindra dealer told me.

Kubota to invest $140M in new Georgia factory, to hire 500 workers​

Jun. 03, 2022 10:58 AM ETKubota Corporation (KUBTY)KUBTFBy: Niloofer Shaikh, SA News Editor

• A Japanese equipment maker, Kubota (OTCPK:KUBTY) plans to spend $140M to build a new factory in northeast Georgia, adding 500 workers to the 3,000 it already employs in the region.​
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• The company said on Wednesday that it will build a new factory in Gainesville to make front-end loaders.​
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• Kubota Manufacturing of America said the Georgia expansion would almost double front-end loader build capacity.​
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• “We don’t currently have the facilities to meet customer demand,” Phil Sutton, vice president of Kubota Manufacturing of America, told The Times of Gainesville. "For Kubota, North America is our biggest tractor market now.”​