Jan/apr 2023: Downward trend continues in the tractor market
January/april 2023: Agricultural tractor registrations in April are an almost perfect copy of March - down 28.61% - and the low levels of farmers confidence for the future have been going on for some time. The factors behind this crisis in tractor sales seem well identified, but measures that could reverse a long-standing scenario are lacking.
Downward trend continues in the tractor market
In April, nothing has changed. The registration of agricultural tractors stabilized at the negative numbers it had already shown in March, and the low levels of confidence of farmers are clearly reflected in the drop in registrations.
Between January and April, 1.642 tractors were registered, 658 less (-28.61%) than in the same period in 2022. abolsamia spoke with Nuno Inácio, CEO of J. Inácio, John Deere's distributor in Portugal, who identified the main reasons for this drop. "There are three or four important points: first of all, the increase in the price of new tractors, which led to an increase in the sale of used ones. People haven't stopped buying tractors, but they are avoiding buying new ones because they are still suffering from high interest rates. These put a brake on the purchase of new equipment and should remain high until the end of the summer, because they are indexed to inflation. If, after the summer, the inflation is 2%, it is likely that interest rates will go down a little, but with some delay," he explained, adding: "There is also the drought, because the lack of water reduces production and profit. We waste a lot of water and we can't even take advantage of the rainwater, which almost all goes to the sea. By now, all farmers should monitor the water needs of the plants and the soil when irrigating. How many do it? Only a niche. Then, agriculture is not seen by the Government as a strategic part for the development of the country, so that support is scarce. All this contributes to the low levels of confidence of farmers in relation to the future."
Statistically, it should be noted that, according to the bulletin of the Portuguese Institute of the Sea and Atmosphere, we had the 3rd April with the lowest level of precipitation since 1931, and during the month, 19.9% of Portugal's territory was in severe drought and 14.1% in extreme drought.
All these factors contribute to 2023 already having four months with less than 500 tractors registered and April was only 407, narrowly surpassing the 400 barrier that February failed to reach. And the decline that has been registered this year increasingly focuses on the 51-100 hp segment, intended mostly for non-professional customers, just as it happened in March, increasing the registrations in the professional sector (+100 hp).
Note: We have purged the ATVs and UTVs approved under the category T and the Telescopics. | Source: IMT / Source: ACAP
The decline this time encompasses even more brands than at the end of the first quarter, with New Holland still showing the biggest decrease compared to the same period last year: -42.5%. Solis keeps the lead but the drop, which was 4% in March, is now 11.26%, a trend that affects the 13 best positioned brands in the ranking. To find the first with a positive balance for 2022, you have to go down to the 14th position, where Branson is: it registered 34 tractors between January 1st and April 30th this year, while in the first four months of last year it had only 18. As for market shares, Solis is the only one of the first five that has better numbers than in the same period last year, with 19.67% (15.83% in 2022). Kubota (10.17%) continues to outperform New Holland (9.81%) in this regard, while Deutz-Fahr and John Deere do not reach 7% market share at the end of April.
Units sold by power segment
About most sold power segments, the >200hp figures stand out: 43 tractors registered, reaching in only four months almost 50% (47.7%) of the total number (90) reached in 2022. Nuno Inácio indicates the reasons that motivate this result linked to the professional sector: "Nowadays there is a tendency for farmers to evolve to larger horsepower, because they realize they can do the work with a larger tractor and a single operator than with two smaller tractors and two operators. This decision is related to three points: the difficulty in finding human resources, good operators; the fact that the cost per horsepower decreases as power increases, i.e. buying two 100hp tractors is more expensive today than buying one 200hp tractor; and the speed key-factor: farmers have increasingly larger areas but the time window for work is the same. So they have to be faster, and this can only be achieved by increasing power. They can also do it with more tractors but it gets much more expensive. The key word today is speed." As for the other classes, the scenario remains the same: <50hp holds more than 50% (51,76%), the 51-120hp class is once again below 40% (37,82%) and the 121-200hp class stands at 7,80%.
Top brands and models, sorted by power segments
According to data from the Institute of Mobility and Transport (IMT), Solis was the brand that registered the most tractors in the first four months of 2023 (323) and also the one with the best-selling model. The Indian brand's highlight this year is the 26 9+9 M5, which had 139 units registered, or 43.03% of Solis' total registrations. It accounts for 39 more units than the... Solis 26 4WD Stage V and 76 more tractors than the Farmtrac 26 4WD, third on the list. As for the leading brands in the different power brackets, Solis extended its <50hp dominance, with 303 new registered tractors, 210 more than Kubota. In the 51-120 hp range, New Holland outperforms the competition, with 121 tractors registered, 31 more than Deutz-Fahr, a brand that occupies a place that was Kubota's in 2022. In terms of power output, John Deere stands out with 121-200 hp, more than twice as many tractors registered (38) as Valtra (18). Even so, the Finns are the best with >200hp: 17 tractors registered, 8 more than the Deer brand. If we look at the most registered models for the professional sector (+100hp) in these first four months of the year, a trio of John Deere - 6120M (17 units), 6130M (7) and 6155M (5) - plus the Massey Ferguson 5713M (6) and the Valtra T174 (5) stand out.
The data for January/April of this year are not yet available.
BRP 'goes up' in UTV's and CF Moto keeps Linhai at the same distance
In an analysis of the ATV (All Terrain Vehicles) and UTV (Multitask Utility Vehicles) sales market in the first four months of 2023, CF Moto maintains the ATV sales leadership, registering a 58.82% growth: it registered 162 vehicles (48 in April), 60 more than in the same period last year, and continues to have 10 more than Linhai, the segment leader in 2022. In UTVs, the Canadian BRP 'soared' in sales: if in March it registered only 4 more vehicles than CF Moto and Polaris, by the end of April it already has 74 units, 24 more than CF Moto and 31 more than Polaris. Finally, note for the good record in UTV sales (39.64%), although down on March, and for the residual improvement in ATVs (2.70%), compared to the numbers between January and April last year.
20.43% drop in the market in Spain
The Ministry of Agriculture, Fisheries and Food of Spain released the data regarding the registration of agricultural tractors in the country in the first four months of 2023 and the numbers are still similar to those of Portugal: 2.540 agricultural tractors were registered between January 1 and April 30, which represented a drop of 20.43% compared to the same period last year, according to the Spanish magazine Profesional Agro.
If we limit ourselves to the month of April, the drop is 17.13%, as 624 tractors were registered, 129 less than in April 2022 (753). Counting the total universe of agricultural machinery in Spain between January and April of this year, the data are also negative, but here, in a residual manner: the official records show 10.028 units registered, 2.74% less than the 10.310 between January and April 2022.
European Agricultural Machinery Association (CEMA) Business Barometer
May 2023 – New upward trend completely reversed
The general business climate index for the agricultural machinery industry in Europe has entirely left its first upward path since the sharp declines in the course of the Russian war against Ukraine, and is still barely at a positive level. In May, the index decreased from 16 to 11 points (on a scale of -100 to +100).
Order backlogs have finally peaked in recent months. The volume of orders has been significantly reduced and is now corresponding to a production period of 5.5 months, which is still very high in a historical comparison, but substantially lower than at any time in the past year.
While considerable easing can be observed on the supply side, uncertainties are increasing with regard to the market side, and confidence levels are declining accordingly. The industry representatives have further downgraded their future expectations. While there is still a moderate majority of company representatives with positive turnover expectations for some large markets such as France and Germany, confidence has virtually collapsed with regard to the markets of Italy, Spain and Poland.
If you want to read this article in portuguese, click here.