Tough conditions for ag machinery sales

German manufacturer Claas has increased sales revenue in the tough conditions.

The company has seen a 0.4% improvement in 2015 but gross profit on sales was down 8.2% from 2014. Source: AFDJ eNews

Claas said its international structure and wide product range was behind the result.

The company expects the worldwide market for agricultural machinery will shrink by about 20% in the 2016 financial year.

A company statement said falling commodity prices and new machinery fleets in many areas is having an impact on purchasing tendencies.

Claas said it strengthened its position in Europe, and sales in North and South America are developing, while Eastern Europe is seeing declines.

In Asia, the company has seen further growth in India, while the market for maize pickers has stabilised in China.

In the US, 2015 was a difficult year for farm equipment sales as lower commodity prices caused lower farm incomes and a decrease in machinery sales.

This comes after several years of strong prices and strong machinery sales.

Four-wheel drive farm tractor sales were down 15% and combine sales were down 17%.

Additionally, the volume of equipment sales in 2012 and 2013 has created a glut of used equipment on equipment dealers’ lots, which has impacted new equipment sales as well. Despite slower sales, manufacturers continue to introduce new equipment.

In South Africa tractor sales fell 12.2% in 2015 to 5,673 units, according to the South African Agricultural Machinery Association (Saama).

The industry warned that the current drought conditions and severe weakness in the rand could threaten the very existence of the agricultural machinery industry.

A sales decline over the past few months saw December sales down 28.5% year on year after a 20.1% year on year drop in November and a 23.2% year on year fall in October.