EDA Chief Defines Four Challenges Facing Dealers

by Kim Rominger

Dealers ended a COVID-infected 2021 on somewhat of a bright note. Equipment sales were, for the most part, steady, and dealers could sell virtually all the inventory they could secure.

New inventory, however, was scarce, and often on allocation by manufacturers.

Overall, dealers ended 2021 on a solid financial footing.

As we end the first quarter of 2022, it looks like a repeat of 2021. Dealers will continue to face challenges this year. I would suggest the following four challenges to be of primary concern for equipment dealers in 2022. Those dealers that can navigate these challenges should find another profitable year in 2022. The four challenges, in no particular order, are:

• Inventory shortages
• Dealer consolidation
• Dealer personnel
• Government laws and regulations
• Inventory Shortages

Inventory will be a critical factor for dealers in 2022. Dealers with plenty of equipment on order will find many of those orders will not be fulfilled. I am told that planter, combine, large tractor, small engines and a large variety of equipment will either not be produced or not arrive in time for distribution to the dealers.

It will take time to get things back to normal as manufacturers struggle with component suppliers, steel suppliers, and all matter of other issues that go into the finished equipment products. Dealers must brace once again for allotments of equipment, parts shortages, and a dwindling of good used equipment in the market to supplement sales or use to serve customers.

Dealers must continue to order what they need to meet manufacturer performance requirements, even if that equipment cannot be delivered. Dealers can expect some equipment to be delivered after the season in which it would likely be sold has passed. This will present challenges for the following months or into the next season and may influence the following year’s order calculations.

Consolidations and Mergers

Dealer consolidations and mergers show no signs of slowing down. Whether the pressure to merge, sell or consolidate are internal or external, it will be felt across the U.S. and Canada. Our dealers are aging, customer bases are decreasing, and the capital and geography needed to efficiently, profitably operate dealerships are changing.

While there are some great younger dealers taking over family businesses, external pressures affect many of these transitions. Additionally, the talent needed in dealerships today is more diverse than it traditionally has been. Technology is pervasive in the equipment that dealers sell, and specialists in this technology are needed to serve customers.

Dealer Personnel

This leads directly to the next challenge: finding not just people to work in the dealerships but good people. And, not just good people, but young people.

I do not know of a dealer in North America who could not use three or four more good technicians today. I read in a recent survey that the average age of dealership technicians today is 57. (Don’t ask me to send that to you as I am certain I couldn’t find it, but it shocked me enough to remember it.)

I follow enough dealers on social media to see they are celebrating far more send-offs for long-time employees than they are new hires, and many of those retirees are technicians. To further complicate the problem, our industry competes with trucking, marine, aircraft, automobile, and so many other industries for these same individuals. Dealers must make themselves attractive to these young technicians in pay, benefits, and working conditions to get these young men and women into their businesses.

Technicians are not the only employees needed today. I mentioned technology earlier. Dealers need these folks as well. As dealers grow, store managers, parts managers, service managers, social media/marketing managers, and so many other types of employees are needed. I see signs begging for workers in my community, and I know that is the norm throughout the U.S.

Suppliers and manufacturers are also battling to find good workers. I am certain you have heard or experienced the story of a business hiring a new person that shows up for a few days then decides not to come back. I can’t tell you the number of times I have had dealers and manufacturers tell me a similar story.

Finding good people, retaining good people, and creating a pipeline of talent will be a huge challenge for dealers in 2022 and beyond.

Laws and Regulations

My last challenge for dealers is a big one: government laws and regulations.  It has been a challenge for several years, and the threat is growing.

Let me start with the threat of a misnamed issue: Right to Repair.  This is a blatant attack on dealers and manufacturers from various groups that want to modify equipment beyond what the equipment is designed to do. Why do I say misnamed? Because I am not aware of a dealer that does not sell parts over the counter to customers that take those parts back to their farm or home and fix their equipment.

I believe that well over half of the parts sold by a dealership leave with customers. We believe in a customer’s right to work on their equipment, and dealers provide customers manuals, tools, and equipment through their manufacturers.

We do not support the right of the customer to modify the equipment beyond manufacturer specifications or to bypass safety or emissions equipment mandated by the government.

The threat of the current administration entering this argument by invoking anti-competitive behavior by manufacturers and dealers has raised this threat to a new level. Ironically, much of what customers wish to bypass are government mandates that limit the equipment’s performance.

The right-to-repair issue and the recent lawsuits against John Deere alleging anti-trust behavior are serious threats to dealers and our entire industry. Dealers must engage—this year and beyond—in protecting against governmental laws and regulations that would have a disastrous effect on their businesses and our industry.

Much is good in the industry, of course, and we have never encountered a challenge that we did not meet. I am certain our dealers will meet these challenges, and we will do it working together.