TMA – Dealers feel drought impact in September

By: Gary Northover

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Sales of Tractors and Combine Harvesters fell in September as the impacts of drought were felt at the dealerships

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Photo: Bloomberg/Contributor/Bloomberg/Getty Images - tractor sales are down 18 per cent across the board after a year of strong sales

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Sales of Tractors and Combine Harvesters fell in September as the impacts of drought were felt at the dealerships

Tractor sales fell by "their greatest amount in recent memory" last month as the impacts of drought were felt, though many in the industry believe the dip will resolve when rains arrive.

September sales data released by the Tractor & Machinery Association of Australia this week showed tractor sales were down 18 per cent across the board after a year of strong sales – defying wider expectations. 

"Tractor sales have surpassed the 12,000 unit mark in each of the past few years and it now appears highly unlikely that that number will be reached in 2018," the Association says, adding that many dealers believed confidence should be restored when and if it rains.

"We expect however, that the combination of exchange rate declines, interest rate increases and possible trade war backlash will see activity operating at a reduced level for some time," the Association says.

The dip comes after a positive start to the 2018-19 financial year. Check out the July report here https://www.tradefarmmachinery.com.au/industry-news/1808/new-financial-year-kicks-off-strongly-for-agricultural-equipment-sales

All four reported size ranges of tractors experienced a double digit dip in September, with sales of tractors under 40 horsepower down 23 per cent month on month and now being 7 per cent behind where they were in 2017.

Sales of the 40hp-100hp range are down 18 per cent and are now in line with last year, while sales of the 100hp -200hp range fell 14 per cent – but remain 7 per cent higher than last year in a rare bright spot for the sector.

Sales of tractors above 200hp are down 22% on last month and now sit 10% behind on a year to date basis.

On a state-by-state basis, South Australia was the only state to experience growth, with tractor deliveries up 20 per cent in September, compared to August, and being 12 per cent higher on a year to date basis.

But sales along the eastern seaboard were severely hit, with NSW dropping another 36 per cent, now down 7 per cent for the year. Queensland sales were down 22 per cent, 4 per cent behind year to date.

Victorian sales held ground, in line with the month and previous year – with the dairy sector offsetting some of the stress being felt in the west of the state. Sales in the Northern Territory and Tasmania were also broadly unchanged.

The TMA says the September dip in sales experienced by Western Australia – down 6 per cent on August but 8 per cent ahead year to date – was "of some surprise".

Dealers described the dip as a pause rather than any real weakness in the market, noting it was a rarity in what has been a typically strong year for the state.

It is not only tractor sales that were affected by the drought, with nationwide deliveries of combine harvesters in September 2018 being almost half of what they were at the same time last year.

"September is the first significant month for combine harvesters deliveries and the much anticipated weakness was seen in September’s numbers with a total of 163 units delivered compared to in excess of 300 units for the same month last year," TMA says.

"It is expected that this trend will continue for the balance of the year leading to a sharp rise in high priced inventory being held across the country."

Other items of farm machinery were also struggling, with out-front mower sales down 27 per cent in September, pushing it 5 per cent behind last year’s levels, while bailer sales are 6 per cent behind last year’s levels as hay production remains stressed across the nation.

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