The number of single-outlet machinery dealers across Australia will continue to decline but not disappear completely – while there will be an ongoing rise in the number of large group outlets, according to Agriview managing director Alan Kirsten.
Discussing industry trends at the Tractor and Machinery Association (TMA) annual conference on the Gold Coast, Mr Kirsten said the machinery distribution network was undergoing significant change with a shift to group dealerships at the expense of single-outlet dealerships.
He said in 2011 Australia had 720 dealers, of which single-outlet dealers outnumbered dealers who had multi outlets by 55% to 45%.
“Today, there are 604 dealer outlets but 59% or 354 are now part of groups with two or more outlets,” he said.
“There are now only 250 single outlet agricultural machinery dealerships in operation.”
Mr Kirsten said in 2012 there was more than $1.8 billion worth of new agricultural machinery sold, plus additional new products and second-hand machinery making the industry estimated to be worth $3.6 billion dollars.
“The key point here is that this is being done through a much smaller distribution channel than has ever existed in the past,” he said.
“The implications of this are vast: not only for the dealers who must fund this but also for the distributors and local manufacturers who must ensure that their channel to market is financially secure.”
Mr Kirsten said a growing number of overseas dealers were investing in the Australian market which had implications for the valuation of dealerships.
“One would have to argue that for the first time it has placed a value on a dealership over and above the traditional value of the shed and the land that it sits on,” he said.
“Clearly out network is now seen as a good place to invest, something we have not seen before.”
Mr Kirsten said the number of large group dealerships would continue to increase and the makeup of outlets would change with not all carrying machinery, instead solely offering parts and service.
Source: Farm Weekly