TMA – Tractor sales slide as drought lingers

The Tractor and Machinery Association of Australia is reporting a slide in tractor sales for the month of November

Nationwide tractor sales in November were down 15 per cent for the month, leaving the year to date (YTD) position around at 2 per cent, where it was in 2017, as the impact of the drought continues to take its toll.

By years’ end we broke a five-year cycle of continuously increasing tractor sales volumes and we expect 2019 to be much the same.

While there are areas of the market that remain strong, we believe that the impact of the drought will be felt for some time to come.

All four reported categories experienced dips in November, most notably in the smaller size ranges. Sales of tractors with less than 40 horsepower (29.8kW) were down 22 per cent for the month and 9 per cent behind YTD. The 40hp–100hp (29.8kW­–74.6kW) range was also down 22 per cent and 6 per cent behind YTD.

Larger tractors in the 100hp (74.6kW) to 200hp (149kW) range were behind 2 per cent and remain around 6 per cent ahead of last year, while tractors above 200hp were down 2 per cent and are 7 per cent behind on a full year basis.

Sales activity continues to vary around the nation. Western Australia is having a bumper year, with sales up 8 per cent year to date following a 15 per cent increase in November.

South Australia is having a topsy turvy year, down 25 per cent for the month, but still 7 per cent ahead of last year and the Northern Territory and Tasmania have seen more tractors sold at this stage of the year than there were 12 months ago.

Not surprisingly, the drought-affected Eastern States recorded declining sales figures in November. NSW was the hardest hit, down 25 per cent for the month and 10 per cent for the full year, while Queensland was down 17 per cent for the month, 5 per cent for the year, and Victoria was down 7.5 per cent for the month and now sitting 1.4 per cent behind annually.

We have previously spoken of the influences that impact a tractor sale, in particular, the roles that improved technology and lower interest rates have had.

Offsetting this to some degree is the renewed focus farmers appear to be applying to machine utilisation, particularly at the high end.

It is perhaps not surprising that when conditions tighten up a bit, focus turns to capital utilisation and this is no different with agricultural product.

We continue to see farm rationalisation occurring and when neighbouring farms combine, there will always be the potential for greater sharing of assets.

This hasn’t been too much of a priority over the last five years or so, but now appears to be occurring to a greater extent, leading to a lessening of demand for new product.

Harvester sales limped along in November with dealers focusing on doing deals that might see a machine held for delivery next year in the absence of new sales. On a YTD basis we are now 23 per cent behind last year.

Bailer sales continue to recover with a huge 53 per cent lift in November, putting them 12 per cent ahead of last year. Clearly there has been a lot more hay cut this year in response to the prevailing conditions.

Sales of out-front mowers have dipped again, down 16 per cent for the month and now 10 per cent behind last year.