2015 Machinery Sales – so far so good.
By: Richard Lewis, Executive Director TMAPosted by Mim Mitchell, 15th April 2015
A combination of low interest rates and the threat of rising prices due to a lower dollar has pushed national machinery sales higher for the first quarter of 2015. Both New South Wales and Queensland have seen vast improvement in sales numbers for the first three months, coming off the back of a poor year last year, with tractor sales up 15% in both States from this time last year. Unfortunately the Victorian market is not faring as well with a drop of 17% in tractor sales from this time last year. However, overall the sales of new and used machinery across the country is up around 12% from this time last year – so what’s driving the demand?
Certainly the low interest rates on offer from the factory credit providers such as John Deere Credit and Agco Finance are taking the financial sting out of the capital purchases – at rates as low as 1.9% being advertised the money is basically free and helping the decision making process. Even the bank rates and non-factory rates are historically very low giving farmers and contractors incentive to purchase. The drop in the Aussie dollar is putting upward pressure on imported machinery prices, and there is a sense of ‘get in early’ among buyers to beat the price rises that will inevitably come. Most tractor companies set their pricing a couple of times each year – around now and later in the second half of the year. That means that stock or inventory on the ground is not necessarily impacted by a drop in the dollar, and forward ordered equipment can often avoid currency movements by fixing in a price for delivery later in the year. Most buyers are aware of this impending price increase and may shed some light on why sales are remaining strong – can it be sustained through the year? One look around the world shows that most of the markets for new tractors have drooped away so presumably we will eventually follow suit at some stage, and we are tipping this will come in the second half of this year. The bright spot in the market is in the hay and fodder machinery sector with baler sales and early orders for hay tools in good shape and expected to remain in an upward trend through the year. Demand for quality hay and fodder is expected to remain strong through the year and currently being helped along by strong livestock prices and poor weather conditions.
Many of the larger machinery manufacturers are reporting declines in sales internationally and will be keen to meet any levels of demand, therefore there will be some very good deals at the dealership levels and factories attempt to keep production levels up, even at a lower margin. Used equipment levels around the country have been reduced in the past year or so as demand has improved, meaning dealers are once again keen to take trades and make a deal happen for buyers. As we all wait anxiously for a decent Autumn break in most of the country, the longer term prospect for farming and agribusiness remains positive and dealers are keen to do business.