Production costs and sales prices in the agricultural machinery sector have soared to unprecedented levels over the past three years. This is one of the main findings of the Axema annual report (1). The economic analysis details a significant and steady increase since 2020, estimated at 30% today.
For agricultural machinery professionals, one atypical year follows another. The covid and the confinements introduced on various continents have disrupted, even blocked, certain production lines just about everywhere in the world. The consequences are well known: rising energy and raw material prices, delays in component manufacturing... Despite this complicated context, sales have remained stable over the period, with even a small increase in volume in 2022 (+2.5%).
Long delivery times
Last year, Russia's invasion of the Ukraine and China's anti-covid policy led to further sharp rises in raw material prices, while parts shortages were still a reality due to the disruption of Chinese economic activity.
Continued demand has led to a further lengthening of delivery times. On some tractor and equipment series, waiting times rose to over a year. Farmers found themselves tearing their hair out, unable to plan certain projects due to the lack of guaranteed availability of their future equipment.
Since the start of 2023, the trade believes that the situation has improved somewhat. Some brands now offer almost normal delivery times, 6 to 8 months after the order, but this is not yet the case for all manufacturers, nor for all product categories.
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Falling orders
Trends for 2023 show prices still at very high levels. Sales in the sector are also likely to be very high, and in part based on orders dating back to 2022. At the same time, however, all distributors are noting a sharp drop in demand in the first quarter of the year: customers can no longer afford to invest at these price levels.
Depending on the category of equipment, the industry is reporting a 15-50% drop in purchases. Is this drop in orders cause for optimism that the market will turn around and prices will fall? Nothing is less certain for the moment. The coming months will be decisive.
In the meantime, unable to invest in new equipment, many farmers have turned to used equipment. In this segment, too, prices have risen, and dealer availability is becoming increasingly scarce. Extending the lifespan of your equipment makes perfect sense.
(1) Axema is the French association of industrial players in the agricultural equipment and agri-environment sector.
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