The Tractor Business

With the Farm Show season coming into full swing the one thing that truly stands out is the new makes of tractors and equipment that keeps showing up! Long gone are the days of the “big four” and it seems every year there are one or two more makes of tractors that we never heard tell of. As the North American market becomes more of a world market the tractor industry has become more confusing with a bigger range of choices and variety of product than ever before. Similar to most consumer products you can now purchase a 50hp tractor in a wide price range. With a huge variance of features and from more suppliers than ever. As with most topics, a bit of information goes a long way in sorting out some of this confusion.

A quick visit with Mike Stewart, Marketing Manager for Innovative Ag & Technology adds some perspective. Innovative Ag & Technology are the local representatives for Branson Tractors, WillRich, and Aerway as well as distributors for FarmPro, Track King, Herd Seeder and Hoelscher.

“Right now we are in the business cycle where the variety of product and price ranges is bigger than ever” states Stewart. “The opportunity to purchase exactly what the customer wants and needs in an economical fashion to do the job he needs it to do is far better than it was 15 years ago. Unfortunately when the marketing machine spins up so does the confusion; be informed! There are a few simple little things that I would look for if shopping:

• Is the brand you are buying actually the manufacturer? Surprisingly there are only 4 or 5 offerings under 100hp built by the branded name they are sold under. Kubota, Branson and Kioti are the most notable. The rule of thumb is the closer you are to the manufacturer the better they will stand behind it. Some brands actually have 4 or 5 different manufacturers in one line-up; and the change regularly. Some brands literally tender their line to the lowest bidder.
• Define your use. If you are going to use a 50hp tractor for 1200 hours a year as an integral part of your operation maybe a $45,000 one is justified; however if it is going to be used for 150 hours a year A $25,000 unit may be a much sounder business decision. There are both available.
• Don’t confuse price with quality. Many factors affect the price that have nothing to do with the actual manufactured cost of the tractor. Country of origin (how strong or weak is their economy), warranty, service and product support, marketing costs, parts support and pricing, etc are all factors that go into the final retail pricing of a tractor. Today our market varies from brands that have a full dealer network with North American parts and service support to marketing companies that just by, import and sell.
• Watch for the standards compliance. Exhaust emissions and safety standards are an ongoing fact of life in our North American market. Standards on cars and trucks were not a factor 15 years ago – today if you are not in compliance you can’t license them. There is product being marketed that is not in compliance to anything – environmentally or safety.
• Do not fear the unfamiliar – research it! Some excellent examples here – Kukje in Korea (the parent company of Branson) is the joint venture partner and manufacturer of Cummins of the A-series engine and has been building farm tractors since 1968; the Jinma engine has been in production for more than 50 years; Foton are one of the largest manufacturers of heavy diesel equipment, cars and trucks in the world. It was not too many years ago that Hyundai, Toyota, Honda, Kubota and Deutz were just strange brands we had never heard of.

One thing is for certain; at no time have we had a better selection available on the North American market. The range of products, choice of suppliers and options of how to purchase has never been greater. Suppliers are out there who sell picked up in a crate – no parts support, service or warranty competing against companies offering full support and four-year full warranties. Products are out there with electronic systems rivaling anything found in the automotive industry sitting side-by-side with tractors built from 1960’s blueprints.

The best advice of all is to be informed and don’t get hung up on past history. The farm equipment industry is probably at one of its most dynamic stages ever; you are making a business decision on the present and future – not the past.

Courtesy of All-Way Equipment,
Norwich, Ontario

The Myth Of "Re-Sale Value"

With the ever growing selection of tractors and their wide price ranges we often hear the old rationalization of “but its a major brand; the trade-in or re-sale value of it will be much higher”. Lets take a closer look at that and see what the numbers really show.

Click Here to View The Myth of Resale Value

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