Dealer sales of new agriculture equipment plunged in 2024 as high interest rates exacerbated challenges facing farmers, prompting OEMs to scale back production and prioritize reducing dealer inventory.
Dealers’ new agriculture equipment sales decreased 15.5% on average in 2024 and are projected to fall 18.6% in 2025, according to a Feb. 6 report by industry research firm Iron Advisor, a subsidiary of inventory management provider Iron Connect. The report comprised responses from dealers representing 150 locations.
New equipment sales dropped 21.9% year over year during the 90-day period ending Jan. 31, while new equipment orders fell 39.2% YoY. Forty percent of the respondents said new equipment inventory levels were above target.
The sales decline last year was attributed to multiple factors, according to the report, including:
- Lower farm income;
- High interest rates; and
- OEMs aggressively pushing new equipment at a time when dealers were already grappling with high used inventory.
OEMs scale back
While some OEMs are offering interest-rate buy-downs, 0% financing and other incentives for new equipment, supply continues to outweigh demand, prompting OEMs to scale back production, Iron Advisor Director of Research Jarrett Harris told Equipment Finance News.
“When you get into these industry moments, where dealers are flush with inventory, both on new and used, you only really have two levers to pull — the pricing-level lever or the production lever. So, these OEMs have already pulled the production lever to some degree.”
— Jarrett Harris, director of research, Iron Advisor
This week, farm equipment manufacturer Agco revealed plans to cut production hours by 15% to 20% in 2025 to focus on reducing dealer inventories, and CNH Industrial similarly cut production hours by 34% in 2024 and plans to “underproduce to the retail demand at least through the first half of 2025,” it said during its Feb. 4 earnings call.
While this trend could help dealers manage inventory, it’s crucial for OEMs to minimize production cuts so they can easily scale back up if demand starts to take off, Harris said.
Pricing out of whack
OEMs have historically lowered prices during periods of oversupply, rather than slow production, because that’s “a tremendously inefficient and expensive thing to do,” Harris said.
During this industry downturn, however, discounting new equipment would “make the situation worse” as dealers are already taking losses on used equipment due to values significantly decreasing in recent years.
“Dealers are holding all of this used inventory,” a John Deere dealer stated in the report. “It is a used equipment problem, not a new equipment problem, and I think they get that.”
Avoiding ‘no man’s land’
Offloading used equipment that’s 1 or 2 years old has been especially challenging for dealers because their retail values fall in “no man’s land,” too expensive for the average used-equipment buyer, but not enticing enough for the average new buyer, according to the report.
In fact, some dealers are avoiding taking in used equipment altogether due to pricing volatility and soft demand, Chase Phelps, owner of Shawnee, Okla.-based Phelps Equipment Group told EFN.
“In the last three to four years, I have steered away from used equipment,” he said. “Especially now, with an abundance of new equipment, we definitely don’t want used equipment sitting next to it.”
To learn more about how dealers are navigating a volatile used-equipment market, register for EFN’s Feb. 11 webinar “Dealers and Lenders: Solving Shared Challenges.”
