Ag dealers leverage OEM discounts, rate cuts to move stale inventory

Agriculture OEMs are pulling back production and reducing dealer inventories through financial incentives, discounts and marketing support.  

The financing arm of farm equipment manufacturer Agco, for one, is offering promotional finance rates of roughly 4% for newer tractors, down from the standard rate of about 6.5%, Derek Weaver, sales manager at Leola, Pa.-based Agco dealer Agriteer, told Equipment Finance News. 

Shortening terms for floor plan financing and discounting late-model inventory is another way OEMs are helping dealers in this regard, he said. This strategy encourages quicker sales and mitigates the risk of incurring interest on unsold equipment. 

“Agco has typically gone with 12-month floor plans on tractors, and they’ve cut it to six months on high horsepower tractors,” Weaver said. “They’re telling us, ‘Instead of giving you 12-months floor plan, we’re going to put those funds into discounts.’ … They’re giving us more discounts to move what we have.” 

Some OEMs are offering lower retail finance rates, special programs and marketing support to help manage dealer inventory, Josh Gruett, general manager at Waupun, Wis.-based Waupun Equipment, a New Holland and Agco dealer, told EFN. 

“It’s a combination of all those things,” he said. “It’s not really one lever in particular. And then the other part is lining their production up closer to what the market demand is.”

“… If they cut their production by 30%, there’s that many less machines out there, so it helps move equipment through the pipeline a little bit faster to get inventory more in line with what demand is.” 

— Josh Gruett, general manager, Waupun Equipment

Several industry titans plan to cut production considerably in 2025, recognizing that high inventory levels have plagued dealers in recent years and thrown pricing out of whack.  

Agco is planning to decrease production hours by 15% to 20% this year and is “laser focused” on reducing dealer inventory, according to its Feb. 6 earnings call.  

CNH Industrial, parent company of New Holland and Case, also anticipates a 15% to 20% production cut in 2025 after it lowered agricultural production hours by 28% in 2024 and dealer inventory by more than $700 million in the fourth quarter.  

Big picture impact on market 

As OEMs incentivize dealers to offload stale inventory instead of ordering new, the wholesale market is reaping the benefits, Agriteer’s Weaver said. 

“Ultimately, the health of the dealership is very important to these manufacturers.”

— Derek Weaver, sales manager, Agriteer

“And if a dealer can transfer — we’ve been transferring equipment out quite a bit — that helps us tremendously,” he said. “That gets our financials in a better situation again. So, I think that’s the reason for cutting production.” 

While the agriculture industry has been in a downturn amid low commodity prices and high input costs, OEMs’ production cuts put dealers in a better position to capitalize on the next upturn as they’re able to focus on right-sizing their fleets, Waupun’s Gruett said. 

“By cutting production right away, you could stabilize the used market a little bit better and keep basically their whole channel in a little better shape financially,” he said. 

Plus, this trend should encourage more traditional capital investments, in which businesses are thinking two or three years ahead, rather than “an impulse buy in December for tax purposes,” Gruett said. 

Early Bird pricing for the third annual Equipment Finance Connect ends March 28. Taking place at the JW Marriott Nashville on May 14-15, 2025, this is the only event for both equipment dealers and finance providers. Learn more and register here.