Kubota NA financing income jumps as inventory improves

Kubota Corp.’s North American financing income jumped as the Japanese OEM raised prices to combat continued inventory constraints.  

North American finance income for the full year 2022 clocked in at $585.8 million, according to the company’s earnings supplement. NA finance income accounted for 68.7% of Kubota’s global finance revenue, according to an Equipment Finance Connect analysis of earnings data.  

Current global finance receivables landed at $3.2 billion, up from $2.8 billion in 2021, according to the earnings presentation. NA incentive rates dropped by $203 million on the year, driven by the “significant increase in the level of interest rates in the [U.S.],” Executive Vice President and General Manager of Planning and Controls Masato Yoshikawa said on the company’s earnings call.  

Inventory improves, prices increase  

Supply chain constraints tamped down production volume below outstanding demand, President Yuichi Kitao said on the company’s earnings call.  

“Due to supply chain disruptions, we struggled to procure parts and materials and were unable to secure sufficient production volume,” Kitao said. “In the North America and Europe regions, we were unable to supply sufficient inventory to meet demand.” 

Kubota raised its prices in North America and Europe to combat rising material costs, he said, noting that the OEM plans to continue to raise prices this year “according to market and inflation conditions.”

Dealer inventory in the U.S. is improving, Yoshikawa said, noting inventory sat at 4.1 months, up from 3.1 months at the end of the third quarter.  

“We recognize that dealer inventories of small tractors have generally been filled, but inventories of mowing equipment, utility vehicles and especially construction equipment are still low and have not yet been filled,” Yoshikawa said. “Therefore, in 2023, wholesale will continue to outpace retail as a whole.”