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Very southern Mn | Don’t think average guy realizes how much control mfg has over a dealer. Ask any dealer friend how they like MUD deals and how their margins are on those deals. Dealer contracts are based on market share, A dealer generally can’t afford to lose those big MUD deals as that gets to be a pretty big percentage of NEW sales which is all the mfg cares about. Every few points of market share could mean literally a 500000- million dollars of holdback or volume on a bigger dealer that dealer gets back at the end of the year. Lose two big MUDs and can really affect bottom line but to get the market share you have to be super aggressive on these deals. So it is a viscous circle. Talking to some old dealer acquaintances I don’t think it has changed except that some dealers are walking away from some MUDs as the volume payment from the mfg isn’t enough to offset losses on these deals.
Normal cycle, dealer gets aggressive in good times and works for awhile and than we see a couple year correction and everybody pulls in their horns and than better times and it starts again. As I said above the problem is equipment keeps getting bigger and bigger and dealer only has a limited amount of customers for that equipment and than to take it one step further where do you go with 3 and 4 year old 60’ field cultivator or a 700hp tractor or a x9 combine or a 16 row head. There is not enough use paid for by first user for current mfg business model to continue to work, especially in bad times. Just look at Auctiontime results, many times a smaller implement will bring same or more than a larger one. It is probably more of a Midwest problem where equipment has gotten so big and specialized. In areas like California tractors get used up by first buyer and generally smaller tractors, wheat areas generally run equipment longer and I am guessing east coast tends to be smaller equipment overall. Obviously used market accepts larger and larger used but not in step with new and every time a new introduction of something huge it just widens the gap. For instance here used market for 450-500 hp 4 wheel or track tractors is pretty accepted, but how many used guys want a 750hp one? The dealer is usually the one that has to figure that out and not a easy task, especially in a down market like we have today.
That is what I see here and what our dealership experiences were. I realize as Deere consolidates it will give the dealership more power but than enter in CIH and Fendt and it starts all over again. I am an old Deere guy and we are still fortunate in our area to have a family run dealership but I am not colorblind anymore. If we see more consolidation yet, there will be a shift on our farm to who are dealer is, and what people that dealer employs, not so much color as service is still most important to me. Glad I don’t have to deal with it on other side anymore.
Edited by jdironman 5/5/2026 08:44
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Worst farm economy since the 80s
