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Don’t take your local dealer for granted.

Posted by Admin, 19th August 2014

20 years ago there were approximately 2000 farm machinery dealerships scattered throughout Australia selling over 10,000 new tractors each year, many of which were small family businesses with one outlet, maybe even two. Today we have 649 of these dealers remaining in Australia, selling the same amount of equipment at a significantly higher price, and interestingly, only half of these dealerships are single outlet businesses. The cost of being a farm machinery dealership has quadrupled in that time as machinery becomes larger and more expensive, and the average amount of tractors sold over that same 20 year period has increased from 3.5 tractors per branch to 18.4 tractors today.

So how does a dealership get to its customers without having a branch in every town? Certainly the advent and use of the internet over this time has changed the way we all do business, and this is true for farm machinery dealers. Diagnostic tools such as ECM’s and the use of laptops has meant that a dealership can have a capable field service capacity where they come to you, rather than the old days when the tractors was brought into the workshop. Parts can be looked up and ordered online, and there is plenty of information on new products on the internet, reducing the need for the farmer to find out information from the salesman over a cup of tea around the kitchen table. Customers and dealers can stay connected via email and clever website and mobile applications, and with the advent of data capable machinery such as yield monitoring and telematics, the dealer can see how a customer is using his machine without a constant on farm presence.

As with the land we farm today, there has been an influx of foreign ownership of some of the larger dealerships in the country from the USA, Canada, South Africa and New Zealand. These “super dealers” are emerging around the country and consolidating small dealership to form larger groups, thereby leveraging the economies of scale and providing the necessary capital required to run a farm machinery dealership in todays environment. At the Annual TMA Conference held in Melbourne in July, we heard from farmers that they are looking for specialists in the products they buy, thereby highlighting the challenges of these larger dealerships to adequately train their staff across a broad range of products. This issue also highlights the importance of the smaller dealer with perhaps a single branch that now is seen as a specialist for a particular area – I guess the point is that both big and small dealers can co-exist, as long as they are delivering the products and services to their farmers.

The next 20 years will see further consolidation and amalgamation of farm machinery dealerships and further investment from foreign entities as the world gets smaller and the expense of running these businesses grows. The local dealers is now a bonus for farmers in that area and should be recognised and supported by their local farmers, otherwise they may not be around to provide that extra mile of service on a Sunday night when the header is down, or the baler needs a part to get going before the rain – my advice? Shop local and support your local dealership as he may not be around if you don’t.