Association of Equipment Manufacturers (AEM) data released recently shows U.S. tractor sales down 9.1% and combine sales down 25.3% in March compared to a year ago. The industry conversation is about cutting overhead. That makes sense. But the smarter question is not how much to cut, but whether the business model itself needs to change.
The next generation of farmers are already making purchasing decisions on the farms they are taking over. Farm Journal research shows they are less brand loyal than their parents and more focused on uptime, cost per hour and operational efficiency and less focused on the dealership experience. McKinsey consultants found that young growers strongly prefer digital channels for product support and repurchase. They are not waiting for an invitation to visit the showroom. They are not coming.
Two major OEMs have read reviewed this data and responded. CLAAS launched FarmPoint in North America in 2023 after proving the model in Europe and South America. Their own description: "one where the experts stop what they're doing and come to you, not the other way around." Mobile technicians, parts runners, service at the farm gate. AGCO Corporation followed suit with FarmerCore - described by their own CFO as an "Amazon-style" on-farm service model. They say dealers can now handle more than 85% of work without the farmer leaving the field.
When two major OEMs independently arrive at the same model, it stops being an experiment. It becomes a direction.
Most dealerships are still centered around drive times and geographic coverage. The assumption underneath that is that physical proximity is what the customer needs. If the next generation of farmers prioritizes uptime, farm gate service and digital access over the dealership experience, the entire basis for how those networks are configured needs questioning. The footprint isn't wrong because it's too large, it has been built around a customer journey that's changing.
Now may be the right time to question not only your inventory, but your business model.
EDITOR’S TAKE:
Wow, this is certainly food for thought when it comes to serving your farm/ranch customers. Especially the younger generation. It is probably easier for an ag equipment dealer to justify some of these changes since the telematics contained in the machinery are connected to computers at the dealership service shop and can quickly transmit a signal to send the mobile unit with parts directly to the farm/ranch. That said, those in the truck world who are following such trends and are serious about serving ag customers are also spending more time out in the field and less time waiting for the customer to come to them. They also lock in business with extended service contracts to conduct routine maintenance as well as other service. If you have not already done so, now would be a perfect time to rethink your business model and segment your customer base.
