Agricultural machinery industry – the state of play

09 December, 2016

Distribution

The distribution network is equally consolidating and shrinking but dealers remain a crucial element in the relationship between manufacturer and customer – few companies sell direct. For larger products, notably tractors, a single franchise remains the norm but smaller products are handled by many competitive outlets. A major challenge lies in the ability of dealers to fully support products of growing complexity whilst struggling with limited profitability.

Global market

The annual world market for agricultural machinery has been estimated to have contracted slightly to just under €100 billion in 2014 and is expected to have suffered a further drop of around 10% in 2015. A precise figure is difficult to come by as much business in the developing world is conducted locally.

Of the measured sales volumes, over a quarter of agricultural equipment by value is recorded as being produced in the EU whilst nearly another quarter is produced in North America. China now produces at least 15% of global output and Latin America and India account for some 15% between them whilst Eastern Europe takes perhaps 6% and Japan less than 5%.

Tractors

In terms of tractor output, the picture is clouded by the existence of small units in developing economies but in round terms the global output of tractors of a size considered as agricultural in developed markets is of the order of 500,000 units each year whilst another perhaps as many as a 1.5 million units of lower power are produced in Asian countries such as India, China and Korea plus other developing areas. The output of tractors in the EU28 in 2014 was estimated at close to 200,000, showing that a large part of global tractor production of larger agricultural units as we recognise them took place there. However, the production in Asia is increasing rapidly and rising through the power range.

www.aea.uk.com