Will the old German or the new Chinese win?

The European and Dutch tractor markets have no shortage of cheap brands, which mainly come from China or India. They focus on livestock farms or entrepreneurs who make few demands on a tractor, but do want to drive a new one. I wonder: does that market still exist?

Chinese tractor manufacturers are good at 2 things: buying companies and doing marketing. I think Arbos is a shining example. They are tightly represented at every major mechanization fair. No silly position, but making progress and everything in the company colors: from tractor to drone. Yet you don't see them (still) driving in the field. During the Agritechnica in 2015, Zoomlion was suddenly there, also from China. Billions of companies that are already full liner and they have all set their sights on Europe.

consumer junk
Why Europe? After all, China is much bigger and the sector requires much more mechanization. The Chinese go for the icing on the cake and hope, as with all other products, to be able to deliver more for much less. That strategy works well with cheap consumer junk (up to drones); look at DJI for example. The agricultural sector, however, is a different story, but that does not stand in the way of the Chinese.

Fendt and John Deere have not yet been sidelined by a Chinese competitor, any more than that is the case with Mercedes and Audi. The situation is therefore not at all comparable with the car world, where the Japanese did beat many Europeans and especially Americans. That comparison is skewed for now, until the quality is at the same level.

Bottom of the market
The Chinese realize that the premium segment is still unfeasible. That is why the focus is on other groups: livestock farmers who buy on price, horse farmers or perhaps a gardener. The latter is having some success. Even the renowned manufacturers get simple models from Turkey, India or China to fill this segment. They don't want to miss any sales opportunity.

Is the (Dutch) market waiting for this? I do not think so. Parallel to the market for new tractors, a new trend is emerging: that of young timers. Moreover, a tractor is worthless without tools. Even tedders, rakes and simple fertilizer spreaders now come with a computer and Isobus control. We are so used to that. When it works, it works great.

However, it also requires a modern tractor. Preferably one with Isobus, a terminal and electro-hydraulic valves. Then you're stuck. And that really applies to arable farmers. A dairy farm in 2019 has its machinery in tip-top order. Electronics have made their appearance there too.

Classics
Farmers with a small budget, who are nevertheless looking for a 'straightforward tractor' for the better dragging and pulling work, solve it differently. They look at the used market: 824 Turboshift, 7810 and 6910S, 8560 and M160. They are models of about 20 years old that can still keep up well. Best of all, when you cherish them, their value doesn't plummet. That is different with a new tractor. In fact, certain (German) tractors now appear to be tapping their new value in guilders again. The old German beats the new Chinese.

A youngtimer gives you good memories. A beautiful engine sound with praise and preferably also a bit of comfort. A new Chinese or Indian model does not offer that. No matter how hard they try. This severely restricts the market for those cheap new tractors. I wonder what the Chinese will do.

Niels van der Boom

Niels van der Boom is a senior market specialist for arable crops at DCA Market Intelligence. He mainly makes analyses and market updates about the potato market. In columns he shares his sharp view on the arable sector and technology.

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