Mercados
Jan/May 2023: A support that feels insufficient
13/07/2023
January/May 2023: Between January and May 2023, 2,030 tractors were registered, which is 824 (-28.87%) fewer than the same period in 2022 (2,854). Since March, the market has stabilized at around 28% negative, but if nothing had changed from March to April, May brought a novelty to the sector. Is it enough to cause a change?
A support that feels insufficient
The registration of agricultural tractor in May remains negative when compared with the same period last year (-28%). However, the Government approved a support granted for the scrappage of agricultural tractors. It is a measure that, according to some brand representatives, "should have gone further" and not limit its impact to lower power segments.
Between January and May 2023, 2,030 tractors were registered, which is 824 (-28.87%) fewer than the same period in 2022 (2,854). Since March, the market has stabilized at around 28% negative, but if nothing had changed from March to April, May brought a novelty to the sector. Is it enough to cause a change? Nuno Inácio thinks not. "Hardly anything has changed, the main change is the scrappage program launched by the government. In my opinion, it will heavily impact the segment up to 50, 60 horsepower, and then gradually decrease up to 100 horsepower. In other words, it will have an impact of around 600/700 tractors by the end of the year, which translates to a maximum improvement of 10% in the overall market numbers for the year," explained the CEO of J. Inácio, a John Deere dealer in Portugal.
Arnaldo Caeiro, General Manager of SDF Portugal, agrees with the same idea and states that "this support should be more suitable for current market prices": "Considering the economic scenario we are facing, this measure should have gone further and be more appealing for the actual renewal of the tractor fleet, maintaining the percentage of co-financing up to 70% and increasing the maximum cost value to be considered for amounts exceeding 50,000 euros."
According to Nuno Inácio, this support does not incentivize professional farmers. "It is very focused on those who engage in family farming, on weekends. If that was the objective, then it was well-directed. But if we think about support that aims to develop the professional agriculture of the country, it does not fit in. I reiterate that the government should have a well-defined strategy for agriculture and see it as a strategic pillar for the country's development. This would contribute to increasing exports, reducing the deficit, and, most importantly, balancing our food trade. These supports should encourage and reward those who practice precision agriculture, the agriculture of the future, as that is the way we can grow. We don't have to do exactly what they do in France or Germany, as their climate is quite different from ours, but we should have a well-defined plan based on the advantages we have here in terms of climate and available soils."
The real impact of this financial support will only be seen in the future, and in the meantime, the drought situation has worsened. Statistically, it is worth noting that 35% of the territory of mainland Portugal experienced severe drought (26.3%) and extreme drought (8.9%) in May. This has led the European Commission to create a support package of 330 million euros for the 22 Member States of the European Union, with Portuguese farmers receiving an allocation of 11.6 million euros. In addition to the lack of rain, the prices of new tractors remain high, coupled with high interest rates. May was the second month of 2023, after February, in which less than 400 tractors were registered (388), and the decline was more noticeable in the <50hp range, intended for non-professional customers, which has been declining since March. From April to May, there was an increase in the number of registrations in the professional sector (+100hp).
Note: We have excluded ATVs and UTVs homologated under category T and Telescopic ATVs. | Source: IMT / Source: ACAP
Brands
This time, the decline encompasses even more brands than at the end of April. Among the top 15 brands, only LS and Preet recorded increases, with the latter experiencing a 50% rise compared to the number of registrations it had in May of the previous year. Among the top ten brands with the most registered units, New Holland continues to experience the largest decrease compared to the same period last year: -43.32%. Solis maintains its leadership, but the decline, which was 11.26% in April, has now reached 21.25%. The brand showing the highest growth compared to the same period last year is Branson - 52% - as it registered 38 tractors between January 1st and May 31st of this year, compared to 25 in the previous year. As for the market shares of the top five, only Solis and John Deere improved. All other brands declined, with New Holland dropping by almost 3 percentage points.
Units sold by power segment
In the best-selling power segments, the figures for >200hp stand out: 53 tractors registered, reaching almost 60% (58.8%) of the total number (90) reached in 2022 in five months. The explanation given by Nuno Inácio in the previous edition seems to be gaining strength, not least because 10 more tractors >200hp were registered in May. "Nowadays there is a tendency for farmers to move towards higher power outputs, as they have realized that they can do the work with a larger tractor and a single operator. This decision is related to three points: the difficulty in finding good operators; the fact that the cost per horsepower decreases as power increases, i.e. buying two 100hp tractors is now more expensive than buying one 200hp tractor; and the issue of speed: farmers have increasingly larger areas but the time window for work is the same. The key word today is speed."
In the remaining segments, note for a change: the <50hp is, for the first time this year, below 50% but, due to the most recent support for scrapping which, as Nuno Inácio and Arnaldo Caeiro explained, aims to help the exchange for low-power tractors, the trend is that it will recover again in the second half of the year.
Best-selling brands and models, classified by power segments
According to data from the Institute of Mobility and Transport (IMT), Solis was the brand that registered the most tractors in the first five months of 2023 (341) and also the one with the two best-selling models. The highlight of the Indian brand this year is the 26 9+9 M5, which had 146 units registered, or 42.82% of Solis' total registrations. It accounts for 39 more units than the... Solis 26 4WD Stage V and precisely twice as many as the 73 tractors of the Farmtrac 26 4WD, third on the list. As for the leading brands in the different power classes, Solis extended its dominance in the <50hp class with 321 new tractors registered, 216 more than Kubota. In the 51-120 hp segment, New Holland outpaced Deutz-Fahr, with 158 tractors registered, 53 more than the German brand, which occupies a place formerly held by Kubota in 2022.
In the higher power range, John Deere excels in the 121-200hp category, registering almost three times as many tractors (60) as Fendt (25). In the >200hp segment, John Deere loses out to Valtra, which registers 20 tractors, 7 more than the deer brand. If we look at the most registered models for the professional sector (+100hp) in these first five months of the year, a trio from John Deere stands out - 6120M (25 units), 6155M (9) and 6130M (8) - in addition to the Massey Ferguson 5713M (6).
The representatives' view
We spoke to three brand representatives about the current outlook for the tractor market, expectations for the next six months and the New Tractor Scrappage Scheme. With rating scales from "very unfavourable" to "very good" and from "decrease" to "increase" we obtained the following opinions.
Bruno Pignatelli (Manager of Tractores Ibéricos)
"Unambitious support, quite limiting and comes late"
Considers that the business of selling new tractors is...
Unfavorable. We find two main reasons, one of external origin i.e. there is a generalized drop in the market, 30% in May vs 2022 and the other internal, as we have several tractors already sold to end customers and Kubota continues to have delays in deliveries on certain models.
Expects turnover in 6 months time to...
Remain stable. We do not think that the drop will be accentuated and, therefore, we should maintain the monthly volumes of 2023 (in our case we expect to recover the delays already mentioned).
What is your assessment of the new tractor scrappage scheme?
It comes late, unambitious, and rather limiting, but it can boost sales a little.
Arnaldo Caeiro (Managing Director of SDF Portugal)
"Tractor scrapping support grant falls short of what was expected and needed"
Considers that the business of selling new tractors is...
Very unfavorable. The reasons are due to the considerable drop in the total market due to the increase in the price of tractors (launch of Stage V engines and increase in production costs in 2022), the unfavorable global economic environment (generalized inflation and increase in interest rates), the drought situation in southern Europe and the lack of support from the Ministry of Agriculture.
Expects turnover in 6 months' time to…
Decrease. The market is expected to fall, not as sharply as to date, in the 2nd half of 2023 for the reasons indicated above.
What is your assessment of the new tractor scrappage scheme?
This plan fell short of what was expected and necessary due to the reduction in the percentage of contribution for the acquisition of the new tractor, the eligible value of the cost of the new tractor, in €/kW, which did not take into account the price increases in 2021 and 2022 and the scoring criteria for applications that are not suitable for the type of tractors that are most sold in the Portuguese market. The period for submitting applications, only one month, is short, but if we consider that the application submission process is simple, we hope that all interested parties will be able to submit their application.
Nuno Santos (Commercial Director of Entreposto Máquinas)
"The market has fallen worse than our expectations"
Considers that the business of selling new tractors is...
Unfavorable. The market has fallen sharply, by around 30%, worse than our expectations, and more markedly in the conventional and specialized segments. This fall reflects the current economic climate and poor customer expectations, which has led to a retraction of investment.
Expects turnover in 6 months time to...
Grow. There should be a relative recovery in market numbers although we believe that the final figures for the year will reflect a (smaller) fall in the 2023 market compared to 2022. Not least because the second half of last year was already trending downwards, investments cannot be indefinitely postponed and because the government incentive program will have a positive contribution. We hope that the slowdown in inflation and the relative improvement in the economic climate will help to mitigate the final fall in our market figures.
What is your assessment of the new tractor scrappage scheme?
Any program that encourages our sector is welcome and will always have a major or minor, but positive impact. We note that the limits on reimbursement are a limitation on the scope it could have, and the geographical criteria for application/assessment are somewhat limiting. On the other hand, the program has been opened to tractors with greater power (despite the unit limitation of €50 k), which will allow other areas of activity to benefit. Positive assessment, but with room to do more and better.
Trailers
The agricultural trailer market continues to improve the number of registrations compared to the same period last year, and the drop is now practically residual: between January and May this year, 676 trailers were registered, 27 (-3.8%) less than in the same period of 2022. Among the four brands with the most registrations, only Herculano has a lower number of registrations compared to 2022 (46% drop), with Galucho maintaining its fast pace at the top of the table, with 197 trailers registered (+ 35.9%), 52 more than Rates, the second brand that also surpassed the 30% growth barrier compared to a year ago. In addition to Galucho and Rates, Joper also manages to do better - it registered 16 more trailers than by the end of May 2022 - but the bipolarity at the top remains a reality: if in March this year, Galucho and Rates held 55.02% of the total registrations, at the end of May they still have the majority (50.59%).
CF Moto dominates in ATVs and BRP maintains 'leakage' in UTVs
In an analysis of the sales market for ATVs (All-Terrain Vehicles) and UTVs (Multi-Tasking Utility Vehicles) in the first five months of 2023, CF Moto strengthened its position as ATV sales leader, increasing growth compared to the same period last year to 59.42%: it registered 220 vehicles (58 in May), 82 more than in the same period last year, and now has 24 more than Linhai, which was the segment leader in 2022. In UTV, the Canadian BRP is increasingly far from the competition: at the end of May, it had 89 units, 24 more than CF Moto and 35 more than Polaris. Finally, note the good record in UTV sales, although it maintains the downward trend since March (34.74%); and the improvement in ATVs (6.91%) compared to the numbers between January / May 2022.
17.24% drop in the market in Spain
Spain's Ministry of Agriculture, Fisheries and Food released data on the registration of agricultural tractors in the country in the first five months of 2023 and the figures showed a slight improvement compared to April (down 20.43%). A total of 3,307 agricultural tractors were registered between 1 January and 31 May, a drop of 17.24% compared to the same period last year (3,996), according to the Spanish magazine Profesional Agro.
If we stick to the month of May alone, the drop stands at 4.23%, as 770 tractors were registered, 34 less than in 2022 (804). If we look at the total number of agricultural machinery registered in Spain between January and May this year, the data is also negative, but here, already in a residual way: the official records show 12,721 units registered, 2.74% less (same percentage as in April) than the 13,079 between January and May 2022.
European Agricultural Machinery Association (CEMA) business barometer
June 2023 - Business climate has further deteriorated
The general business climate index for the agricultural machinery industry in Europe has dropped to its lowest level since the crash in the wake of COVID-19, but is still at a balanced level even with this further decline. In June, the index decreased from 11 to 1 point (on a scale of -100 to +100). After some easing on the supply side, uncertainties are increasing with regard to the market side, and confidence levels are declining accordingly. Along with the deterioration in evaluations for the current business, industry representatives have further downgraded their future expectations.
The differences within segments and regions thereby have increased: While the climate for livestock and harvesting equipment is still at a positive level, the climate for tractors and arable equipment, among others, has clearly slipped into negative territory. Also, there is still a moderate majority of company representatives with positive turnover expectations for some large markets such as France and Germany, whereas confidence has basically disappeared for the markets of Italy and Poland. For 2023 as a whole, the survey participants still expect a slight increase in turnover for their company on average, among others, due to high turnover at the beginning of the year as a result of the reduction in manufacturers' order backlogs.
