Key Takeaways for Decision Makers
RENTER/SELLER/BUYER: While the overall agricultural market is still down, the downturn does not seem to be as severe as we feared.
According to Association of Equipment Manufacturing (AEM), sales for four-wheel farm tractors went down 15% in 2015. After reading about the volatility in the agricultural equipment industry during 2015, our analysts at EquipmentWatch were curious about the state of tractor sales in the resale market, so we examined sales records for wheel and track tractors in depth for 2014 and 2015. Over 200,000 resale records were pulled for this analysis. By looking at track and wheel tractor sales separately, we see that wheel tractors are more popular but more volatile than track tractors, and that despite the economic reset of the agricultural industry, the used tractor market was more nuanced than we first thought for 2015.
Retail volume for wheel and track tractors peaked in 2014Q2 and 2015Q3. We took a greater in-depth look at tractor sales for 2014 and 2015, and found that sales for both wheel and track tractors peaked in 2015Q3. This could reflect an upward trend for farm equipment leading up to harvest-time; however this does not explain why tractor sales peaked in 2014Q2. The reason for the spike in tractor sales in 2014Q2 could be on account of an increase in demand for agricultural equipment leading up to planting season, or an attempt to prepare for harvest early. Volume went down for 2015Q4 for both wheel and track tractors, although wheel tractor sales fell more than track tractor sales. This could result from the downward turn in the overall market near the end of 2015.
In order to get another perspective on tractor sales, we looked further into volume trends divided by size class for each type of tractor. When looking at track tractor sales, we found that the higher the size class, the higher the sales volume. This trend could be because track tractors tend to be better for rough or hilly terrain, so more horsepower helps track tractors maintain traction. When we looked at wheel tractor sales records by size class, we found a different trend.
The most size class for wheel tractors with the highest sales volume was the 75 to 124 hp size class range. This particular size class of wheel tractors has actually increased in volume from 2014. Wheel tractors ranging from 125 to 174 hp were only slightly more popular than 25 to 49 hp tractors, and 50 to 74 hp wheel tractors were the least popular.
High horsepower track tractors with 375hp and over tend to sell more than other track tractors, while 75 to 124 hp wheel tractors tend to sell more than other wheel tractors. This could be because track tractors are used on rough or uneven terrain therefore higher horse power may help a track tractor maneuver rough fields better. Wheel tractors on the other hand tend ride better on smoother hard surfaces and are able to turn under loads better, and tend to be cheaper to maintain. This could possibly explain why high horse power wheel tractors are not in as high of demand. What will 2016 bring for tractor sales and the agricultural equipment industry in general? Time will tell.