Dealers Feel Better About Inventories, Manufacturers Bring Different Perspective

A survey conducted by the Equipment Dealers Association (EDA) reveals that dealers feel better about their inventories in 2017 than they did in 2016.

Manufacturers have different opinions.

Forty-three percent of dealers who participated in the survey feel their new equipment inventory is just right. Another 43 percent say it is too high. The remaining 14 percent feel it is too low.

By comparison, in 2016, 62 percent of dealers felt their new equipment inventory was too high, and 30 percent felt it was just right.

Dealers’ feelings on used inventory also improved. Last year, 59 percent thought their used inventory was too high. This year, that’s fallen to 48 percent. Thirty-six percent of dealers think their used inventory is just right, which is six percentage points higher than last year. Sixteen percent believe it is too low, compared to 11 percent last year.

“Dealers have been more effective in managing their used inventory since the last survey,” said Kim Rominger, CEO of EDA. “This is vitally important for the health of our dealers.”

In partnership with EDA, the Association of Equipment Manufacturers (AEM) surveyed its members with the same questions. Results revealed differences.

Six percent of manufacturers think dealer inventories are too high compared to dealers’ 43 percent.

The majority of manufacturers feel that inventory levels are just right. Seventy-two percent feel that way about new equipment, and 76 percent about used equipment. Last year, 43 percent of manufacturers thought dealership inventories were just right.

Potentially driving the differences is that dealers have a more immediate point of view and are likely considering inventories of multiple brands, whereas manufacturers are focused only on their brand and longer-term perspective.

“The discrepancy in the results between dealer and manufacturer participants is not surprising based upon the disparity in dealership group size and the year that we have had,” Rominger said. “Large agricultural dealers tend to have higher-value, late-model, large used equipment without the diversity of the market enjoyed by small agricultural equipment dealers. Larger agricultural equipment seems to be moving more slowly and is requiring more effort or concessions on price than we are seeing in the small agricultural equipment arena.”

Rominger also said that while some regions are projecting record harvests, others face challenges such as heavy rainfall or drought.

“While dealers are taking the survey with their own ‘micro’ perspective, based upon their region and target customer, manufacturers seem to feel more balanced with respect to inventory, overall.”

Source: Equipment Dealer News