Another big year building for ag equipment sales

By: Gary Northover

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Industry news 348 gallery 1 Industry news 348 gallery 1

Following on from a seasonal pause in April, sales of agricultural equipment across Australia were once again very strong in May, all of which augers well for a very healthy 2017.

Sales of tractors were, in total, 14 per cent up on April, and are now 3 per cent above last year’s record figures. All four reported size ranges (0-40hp, 40-100hp, 100-200hp and 200hp+) experienced increased sales for the month and all now sit ahead of last year’s levels.

Of particular note was the strength in the large tractor range: the 200hp and above sector was up 24 per cent up on April and now 10 per cent up on last year; the 100-200hp tractors were up 19 per cent and in line with last year.

Dealers are reporting that this is generally reflective of a successful planting season. Big crops have been sown off the back of last year’s prosperity and farmers are generally optimistic about fleet replacement.

Sales of smaller tractors were once again at healthy levels: the 0-40hp range was up 13 per cent and sits 10 per cent above last year; 40-100hp sales were up 6 per cent for the month.

Geographically, sales have been strong in all states, with WA the exception.

Sales in Victoria are up 19 per cent on last year as a level of stability returns to the dairy sector, Queensland and NSW are both seeing sales in line with or above last year, and activity in South Australia and Tasmania sits around 10 per cent ahead of last year.

In addition to the generally healthy environmental conditions contributing to confidence, there are a number of other factors helping to drive sales.

  • Attractive sales incentives, particularly in the form of low (sometimes zero) interest rates were first noticed late last year and these now appear to be the norm for many brands. Manufacturers are still keen to deal and this is reflected in the ongoing presence of these incentives.
  • There are very few low-houred second-hand machines in the market, which is fuelling interest in new purchases. As we’ve previously reported, good-quality trades are being quickly snapped up, keeping prices up and, in so doing, making the new purchase option more attractive.
  • The presence and extension of government incentives in the form of the depreciation allowance and the move to accrual-based accounting for businesses with turnover less than $10 million has been of great assistance to the industry. While there aren’t many tractors that retail for $20,000, the incentive allows buyers to apply this to tools and implements that can typically form part of the package. We are also hearing of a knock-on effect where savings made through these incentives has the additional benefit of freeing up funds to support a tractor purchase.

Sales of combine harvesters and balers have yet to reach any great levels across the country and we don’t usually get the full picture until just before harvest time. Order books and general interest are reported to be high, so we expect this to be reflected in actual sales in the months ahead.

Finally, the sales of out-front mowers are very strong, up 5 per cent on what was a big year last year.

All in all, 2017 is shaping as another record year for the agricultural equipment industry.

 

Gary Northover is executive director of the Tractor & Machinery Association of Australia (TMA). He can be contacted on (03) 9867 4289 or gary@tma.asn.au

 

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