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The Changing Face of Australia’s Dealer Network

Posted by Admin, 23rd April 2014

In recent weeks the receivers were appointed to a longstanding dealership with three branches across Victoria and South Australia after they we unable to sell the business as a going concern, and in a stark contrast, a North American dealer group took full ownership of a Victorian dealer group and promptly made another dealer acquisition giving them six branches. I guess this leads to the question that many of the dealers and manufacturers are asking – is it better to have a larger dealership with multiple outlets or is there still an argument for smaller one outlet standalone dealerships? Personally I believe that there is a place for both. Many areas cannot justify more than one dealership as the rents and real estate prices are high – for example dealerships within metro areas – where the businesses will more likely invest in field service capability to reach the machines in their area. As you move to the more remote parts of the country, the larger dealerships and multiple branch dealerships tend to appear as the distances to cover become too great for field service and parts supply for their customers without a depot or branch filling in the gaps. There are many examples of excellent dealerships that are a one outlet businesses and perhaps the reason they are not a part of a larger group is that they are too good and therefore too expensive to acquire.

No matter what your thoughts are on whether large or smaller dealerships are the correct method of distributing farm machinery to end users, one thing is for sure is that the dealer network in Australia is getting smaller – there is only a little over 600 machinery dealers left in the country, which compares to over 1000 dealers just 15 years ago. Will there be more foreign publicly listed businesses from overseas buying into Australian dealers to expand their global footprint and diversify their geographical presence – the answer is probably yes. Today we have foreign interests in Australian dealerships from North America, Canada, South Africa and New Zealand and their presence continues to expand. The future of the Australian dealer network is bright on the back of an expanding agribusiness industry and a need to feed the world, particularly Asia. The business of running a profitable dealership whether it be one or a multiple branch group will remain tricky in the face of seasonal conditions, increasing competition among the manufacturers and the difficulties of attracting talented people. Sadly there will be the inevitable business failures as we have seen already this year, and conversely there will be success stories where a dealership is able to open a new facility or branch as they are well supported in a particular area or territory. The landscape is changing with the global pull of the the internet for information and the technical advancements of machinery – we will always need dealers to sell, service and support farm machinery, that is for certain. How they will look and be structured is the unknown over the next few years. Either way, it should pose opportunities for many dealers to expand, sell or merge and hopefully reward the owners for their hard work and sound business practices.

Richard Lewis