Farm Equipment - Successful Agritechnica Supports More Positive German 2014 Sales Outlook
Background: Agritechnica is the world’s largest international exhibition for agricultural machinery and equipment, taking place every other year in Germany. Agritechnica 2013, held in Hanover last week, attracted 2,900 exhibitors from 47 countries in 2013, as well as 450,000 visitors -- a record.
Agritechnica Demand Meets to Exceeds Expectations
Five German farm equipment dealers interviewed after last week's Agritechnica show said order activity during the exhibition met or beat their October expectations, although it remains to be seen whether this will improve the overall outlook for 2014 European sales, which, in October, were expected to moderate yy. (OTR Global's next farm equipment report is scheduled for January.). “We had high expectations for Agritechnica, and they materialized,” one dealer said. In OTR Global's October report, customers had suspended their orders in advance of the show, but farmers expressed signs of confidence in the market during the event. “The farmers’ good mood was visible during Agritechnica. Milk and grain prices are high, and the European Union’s subsidies for 2014 have been confirmed. This ensures stable and good revenues for farmers in 2014,” one source said.
2014 YY Sales Expectations Improve Since October
(Number of sources)
2014 YY Sales | October | November |
Up slightly | 1 | 3 |
Flat | 1 | 1 |
Down slightly | 2 | 1 |
Don’t know | 3 | - |
Consequently, three of five sources expect their November-January orders for new equipment to increase yy, while none expects a decrease. Furthermore, two of four responding sources revised their 2014 sales forecast upward while none revised it down. “We see that Agritechnica has given a good impulse for order intakes in November through January. The situation in the agriculture industry is satisfying, and I believe many farmers will be in the mood to invest next year,” a source said.
Overall, sources' views on 2014 new equipment sales now tilt positive, although not strongly so. Three sources predict slight yy growth, one expects flat sales and one predicted a slight decline, reflecting healthy farm income partially offset by some continued concern about market saturation, especially in combines. “Order intakes were completely OK during the fair -- we are happy -- but it was not as outstanding as the number of visitors. I see a saturation of the market in 2014. Tillage equipment sales might increase, but tractors sales will be flat, and combines sales will be down,” the source said.
Usual Incentives During the Show
All sources said manufacturer incentives during Agritechnica were in line with their expectations. Deere & Co. dealers noted the brand was not especially aggressive. Meanwhile, two of five sources said Claas KGaA mbH was more aggressive than other manufacturers, which is in line with October findings. “Deere has financing offers, and some offers for special models, but nothing extreme. Claas is very aggressive in marketing, and [SAME] Deutz-Fahr [Group S.p.A]. is following them. It seems that both of them want to gain share,” a source said. Another said, “There are some offers [during Agritechnica] but not very strong. In fact, on the contrary, I expect prices in 2014 to be up at least 5% year to year.”
What: Agritechnica, the world’s leading international exhibition for agricultural machinery and equipment
When: November 10–14, 2013
Where: Hanover, Germany
Who: 5 German Deere dealers; all repeat sources from OTR Global’s October 21, 2013 global report
Buzz:
“Agritechnica was more successful than expected. The atmosphere was really good.”
“Agritechnica is said to have beaten the CeBIT computer fair, as well as the Hanover Messe [industrial fair], in terms of attendance. In hall 13, where Claas and John Deere had their booths, it is said there were 84,000 visitors on Thursday alone and 70,000 on Wednesday! Furthermore, it was gigantic. For the first time ever, every hall of the fairground was booked.”
“Our harvest equipment inventory levels are too high. We have bought too much of this products group and so did other colleagues. Obviously, our sales outlook was a bit too optimistic there.”
“There were a lot of Asian exhibitors from China, Japan and Korea. To me, the displayed products featured a theme of gigantism, i.e. combines with cutting features of 21 meters. This may apply in Argentina or the U.S. but not here.”
"Claas is really pushing into the market. They are going on the offensive with their marketing, and they have excellent customer service."
