The year that was and some crystal balling…Posted by Mim Monkivitch, 23rd January 2014
2013 saw what could be best described as an average year for farm machinery sales throughout Australia, with some highlights and lowlights at either end of the curve. Tractor sales fell 7% from 11,500 units in 2012 to 10,500 units in 2013 which was an unexpected surprise for most dealers and importers. This makes 5 years in a row of higher than 10,000 units sold into the Australian marketplace, which is now looking like the new average. Taking a closer look at the numbers gives you some idea where the demand is coming from – up to 40 hp and the lifestyle market place contributes around 30% of the total market, and there was less than a 5% drop in this category year on year, suggesting that the non-productive market and lifestyle farming market remains strong. This sector is driven by off farm income and is difficult to forecast as there is little correlation to general agricultural indicators and the performance of this sector. The largest part of the Australian tractor market is the 40-100hp market which accounts for 40% of the total market and dropped almost 15% this year. The primary driver for this reduction is within the poor performing horticultural and viticultural markets and the tough first half of the year felt by the dairy industry. Surprisingly the 100-200hp market which holds 18% of the market, rose 6% year on year due to the uptick in dairy fortunes and hay and fodder markets at after June last year. Finally the large 200+hp market saw a drop of 6% and holds around 12% of the total market in units, however accounts for a large proportion of the dollar volume of the marketplace and therefore is very important to importers and dealers. So there you have it in 2013 – as mentioned an average year with some highlights and lowlights within the numbers.
Additionally the combine harvester market fell to 700 units nationally, which is slightly below expected but down 30% from the previous two years of 1000+ units sold into the sector. Thankfully the baler market was up 10% after 5 continuous years of decline and reports from the field confirmed that most dealers managed to clear out their inventories of used balers and hay tools, which is a welcome change and reflects the high demand for hay and fodder throughout the country due to dry conditions and improved dairy performance. Out front mowers remained relatively unchanged on 5000 units for the year due to a big uptick in sales in December of over 40%.
So where to from here? Can we expect another 10,000 + year of tractor sales? Well we think not, although it will be close! We have forecast a 5-7% reduction in tractor sales this calendar year across the country due to a number of factors, not the least of which being the amount of equipment that dealers have had to trade over the past few years to achieve the new sales volumes. There is plenty of new and used inventory on the ground in Australia both at dealers yards and in the depots and warehouses of importers and manufacturers. This is both good and bad news. The bad news is that dealers will be careful when offering trade values on new machines (if at all) until they move their current used inventory, and this will likely drive down the values of used machinery in Australia in the short term. The good news is that the new stock that is in country will be priced at a higher dollar than where we are today, so there should be some decent deals around for buyers – particularly if they don’t trade. Combine harvester sales will be lower than this year by a similar figure to mid-600 units nationally as dealers face the same trade/used difficulties in this market, and moreover the large pacts of broad acre Australia that are in dire need of rain. The baler and hay tool market is expected to increase another 10% as this market recovers and the prospects of dairy producers improve from this time last year. We haven’t mentioned tillage and sprayer sales as we don’t measure these markets specifically, however 2013 was generally a vast improvement on past years for both products and the expectation is that tillage sales will continue to improve with sprayer sales to drop significantly as the market is again oversupplied with used trades at dealer level.
There it is – the TMA prediction for 2014. In a nutshell, not too bad considering our history and certainly better than a lot of sectors of the Australian economy. Happy selling.