News Mechanization
Price and delivery time of machines are alarmingly high
The mechanization sector continues to be plagued by sharply rising prices of raw materials and parts. The deliveries of parts have also not returned to the old normal since the corona pandemic. This can lead to the delivery time of a new tractor or machine being up to two years.
European reporting is remarkably calm about the delivery problems and cost increases of tractors, harvesters and implements. If you check the North American media, you will hear a completely different sound. At the manufacturers there, delivery times are rising sharply, up to two years for a new combine, and obtaining parts is an ongoing issue. Especially when it comes to microchips.
Quarter more sold
End of September reported trade association CEMA still relatively positive figures on the sale of new tractors in Europe. Although total sales in 2020 shrank by 3%, in the first half of this year the registration of new tractors increased by a quarter compared to 2020. Especially in the major markets of Germany and France, farmers have bought more new tractors. The CEMA barometer, which gauges the mood among manufacturers, rose to a relatively high level for the third month in a row.
Despite this good mood, European machine manufacturers report that purchase prices have risen extremely and that supply shortages are only increasing. 40% of companies expect to have to partially shut down production in October because not all parts are available. Despite these problems, manufacturers believe that sales will increase by an average of 2021% over 10.
Dealers in North America are also positive about 2022 despite the difficult situation. That calculates Farm equipment as a result of our own research. On average, half of dealers think new sales will increase by 2% next year. Only a small part of the mechanization companies think that sales are declining. A quarter do not expect any changes.
Used machine worth more
Almost every company assumes price increases. Most with about 4% to 6%. This is comparable to Europe at first sight, although the percentages differ widely. Increases of around 2,5% are soon announced, but on specific machines the prices do rise by 10% or 15%, according to practice. Wear parts for tillage machines have risen sharply in price at some manufacturers. Sometimes even doubled. For example, the plastic hose of an irrigation reel has also become much more expensive, as a result of which the prices of reels also rise sharply. In practice, it happens that machines that are a year old are worth more than the purchase price at the time.
Josh Jespen, president of John Deere, tells Farm Equipment that Deere & Co is counting on delivery problems to continue through 2022 and certainly not abate in the final quarter of this year. It is therefore not surprising that farmers who do want to buy new, choose to order early. This sound can be heard not only in American, but also in Europe. Moreover, the delivery time of already (early) ordered machines can usually be met. Nevertheless, delivery times of six to nine months are not unusual.
Farmer reluctant
Now that the cultivation costs for 2022 are rising sharply, companies are reluctant to purchase new machines. This may be less important in dairy farming, due to the more positive milk price developments. CEMA also reports this in a message about grassland machines. The necessary is replaced. If you want to buy a new tractor, you should do business early to ensure that it will be delivered on time next spring, or wait and see. It is also visible that the sale of used machines is picking up, because buyers do not want to wait for price increases and unpredictable delivery times.
Niels van der Boom
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