Mercados
There is still a faint light at the end of the tunnel
15/05/2023
January/March 2023: the first quarter of the year ends with a negative register (-28.78%), although with a slight improvement over February figures. Given the absence of investment support projects - short, medium or long term - the trend is not very encouraging, especially because farmers still do not know what help they can count on from the Government.
There is still a faint light at the end of the tunnel
"For 2023, expectations are of a significant drop in the tractor market if there is no investment programs to the support and revitalization of agriculture that allows to cope with the generalized increase in prices and production costs." This "significant drop in 2023" predicted by Arnaldo Caeiro, from SDF Portugal, and other brand representatives in the 2022, is already being felt: at the end of the first quarter there are 28.78% fewer tractors registered compared to the same period in 2022. More important than clarifying the farmers, urges the "opening of applications for the different income and investment support."
The first quarter of 2023 was the confirmation of a scenario already expected by the professionals of the sector: the registration of agricultural tractors fell sharply in January and February and even though March showed a faint light at the end of the tunnel (6% improvement in relation to February), the drop is evident. In the first three months of this year, 1,235 tractors were registered, 499 less (-28.78%) than in the same period of 2022 and, given the absence of investment support projects - short, medium or long term - the trend is not very encouraging, especially because farmers still do not know what help they can count on from the Government. A "more efficient and sustainable agricultural mechanization, as well as strong encouragement in agriculture 4.0" to provide the revitalization of the sector is increasingly necessary, as highlighted by Nuno Santos, Commercial Director of Entreposto Máquinas, in the previous edition. And the negative impact in this first quarter is felt even in brands that showed strong growth in 2022, such as Solis, Kubota or John Deere.
If in March 2022, the market was showing signs of strength, with a growth of about 14% - due to a wave of deliveries that were postponed since the final period of 2021 - a year later, the situation is reversed: a decrease of 28.78% and three months with registrations below 500 tractors/month, a situation that only occurred five times in 2022. And in February less than 400 tractors were registered, something that last year only happened in November and December, in a clear sign that the decline was here to stay. A situation that may open space for Nuno Santos' 'request' in the previous edition of abolsamia: "A deep strategic reflection should be made about our food security, in order to better prepare ourselves to subsist in disasters and to react to possible scenarios such as those that could have come out of a pandemic or a war in countries on which we are too dependent to feed our population."
Nota: Expurgámos os ATV e UTV homologados sob a categoria T e os Telescópicos. | Origem: IMT / Fonte: ACAP
Brands
New Holland won the year 2022 but is the one that presents the biggest fall among the ten brands that registered more tractors in the first quarter: -52.91% compared to the same period last year. Solis is at the top, although with a 4% drop compared to 2022 and, among the Top10, only Farmtrac and LS improved their numbers, although slightly. If at the end of March 2022, there were three brands above 200 registrations, this barrier is now only surpassed by Solis, which registered 264 tractors between January 1 and March 31. In terms of the brands' market shares, Solis has 'shot up': it has 21.38% when it had 15.86% at the end of March 2022. New Holland reaches the end of the first quarter with an 8.5% share, down from 10.12% for Kubota, the second brand with the highest market share in March 2023.
Units sold by power segment
Analyzing the most sold power segments, and after the signs from January and February, March confirmed that, without the Government support for a new Agricultural Tractor Fleet Renewal, the roles are inverted in relation to 2022: now the <50 hp class rules, surpassing the 50% barrier - with 51,74% - and the 51-120 hp class is below 40% (37,73%). In the higher-powered segments, the 121-200hp range is still sailing between 7 and 8% (7.45%), while the >200hp range has already registered 38 tractors, reaching, in just three months, 42.2% of the total number (90) of 2022.
Top brands and models, sorted 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 three months of 2023 (264) and also the one with the best-selling model, even though it is not the one that monopolized 2022. The highlight of the Indian brand is now the Solis 26 9+9 M5, which had 111 units registered, or 42.05% of total registrations. It thus accounts for 59 more units than the Farmtrac 26 4WD, which keeps its status as the second most registered model from 2022. As for the leading brands in the different power classes, Solis extended its <50hp dominance, with 246 new registered tractors, 178 more than Kubota. In the 51-120 hp range, New Holland outperforms the strong competition, with 84 tractors registered, 13 more than Fendt, which now occupies a place that was Kubota's in 2022. In the higher horsepower category, John Deere is still the leader in the 121-200hp range, with 28. more than twice as many tractors registered as Valtra (13), but the Finnish brand redeems itself in the >200hp range, with 15, more than double the 7 registered by John Deere.
The vision of brand representatives
abolsamia magazine asked four brand representatives for a reading on the market at this stage of the year.
1 - 2023 started out in sharp decline and worsened in February, but has already improved by the end of the first quarter, although still negative (-28.78%). Was this drop expected? How do you foresee the evolution of the market in the next three months?
2 – After the preponderance of the 51-120 hp range last year, the brand representatives contacted at the end of the year indicated that this range would lose weight again this year to the detriment of the <50 hp range, which is what is happening. Is it just to do with the absence of a new Agricultural Tractor Fleet Renewal program or are there more reasons to justify this change?
3 – What measures do you think could be taken by the Government in relation to the support foreseen for the renovation of the machinery fleet?
4 – And the companies, what kind of strategies can they develop in order to contribute to the revitalization of the sector?
Nuno Santos (Sales Director, Entreposto Máquinas)
"We expect that in the next quarter the drop will be less pronounced. "
1 – The fall recorded at the beginning of this year was predictable and in line with the trend of the last months of the previous year, perhaps not so accentuated, but even so one cannot speak of a surprise, considering the current context. We think that, in the next three months, the downward trend relative to the same period last year will continue, but we expect it to be a little less pronounced than it was in the first two months of the year.
2 – Yes, the absence of incentives to scrap/replace equipment in this segment has a direct consequence on the numbers. On the other hand, our agricultural business fabric has registered a growing professionalization trend, which usually implies a higher relative growth in this segment and in the higher power segments as opposed to the compact ones more linked to "Hobby Farming" and smaller farms.
3 - The incentive program to scrap and renew older, more polluting, less efficient, and less safe equipment was a success that may well be continued, but we should bet more on the new trends available that allow us to significantly improve the competitiveness of our business customers, associating the equipment with differentiating features, such as connectivity and real-time analysis, automation and semi-automation, and even fleet analysis and agronomic software, among many other new solutions already available.
4 – The focus on training and consulting among professionals is essential to boost the development of solutions and products. The simplification and flexibility of processes and business models available to our customers should be developed by creating new ways of doing business beyond the "classic" buying/selling ones. Finally, having a voice of advice/opinion, whether with farmers associations, regulators and governments would be a positive contribution to the development of our sector.
Arnaldo Caeiro (General-Director, SDF Portugal)
"Criteria for approving applications for renewal of tractor fleet frustrated farmers"
1 – This drop was expected especially after the strong growth the market had in the first quarter of 2022 largely due to the tractor fleet renewal measure. In the next three months due to the low expectations of farmers, exacerbated by the drought situation, we expect a drop in the market.
2 – The 51-120 hp power segment increased in 2022 much because of the influence of the tractor fleet renewal measure. This is a fact. However, within the 51-120 hp power segment, we have to make a separation between 51-100 hp tractors, mostly intended for non-professional clients, and therefore very dependent on investment support, and tractors above 101 hp which, we can say, are mostly intended for professional clients where the purchase is largely determined by factors dependent on the profitability of the agricultural activity. By analyzing this it is possible to conclude that between January and March 2023 the 101-120hp segment has a smaller drop than the 51-100hp segment. Regarding the <50hp segment, it increased its relative weight in the total market mainly due to sales of tractors below 26hp.
3 – The measure for the renewal of the tractor fleet received 7,120 applications of which only 1,362 were approved, which means an approval rate of 19%. This result was well below expectations and, to some extent, caused frustration among farmers, mainly because the scoring criteria were, in my opinion, little or not at all adequate to the agricultural reality of the country. The Ministry of Agriculture decided to go ahead with this measure in 2021 without consulting the entity that represents the companies that operate in the agricultural tractor market, the Specialized Committee of Agricultural Machinery Wholesalers of ACAP and, as such, the result is this: of the 1,362 approved applications, 68% were in the North Zone, 27% in the Center Zone, 3% in the Alentejo and 2% in the Algarve. It is our conviction that the measure should continue, although with different scoring criteria in order to benefit all regions equally. It is also public that in March 126 million euros were made available in the PDR2020 that will benefit about 2100 applications pending due to lack of budgetary allocation. We hope that this decision will benefit the market of agricultural tractors.
4 – At the company level, I think we all face a similar situation, with sales falling sharply because the total market is falling. When the market is in sharp decline, the strategy is mainly to improve the competitiveness of our products. Of course, each brand has its own way.
Bruno Pignatelli (Manager, Tractores Ibéricos)
"I don't foresee any major changes in the coming months"
1 – Yes, the drop was expected, given not only what had been happening since the middle of last year, as well as the worsening of the economic situation in which inflation not only caused prices to skyrocket, but at the same time, interest rates skyrocketed and made financing also more expensive. Moreover, add that there are no projects with state aid underway and they are not foreseeable in the short term... Unfortunately, and in view of what I said, I don't see major changes in the coming months.
2 – I wouldn't say that it is losing weight, but that the <50hp class is growing a lot. From my point of view, it has to do with some factors such as the decrease of imports of tractors without license plates during the pandemic, the limitation that they cannot circulate on public roads and also the appearance of several brands from cheaper markets. This makes the prices of these tractors attractive not only for this type of market but also for tiller and less professional use customers. In the case of our brand, the models in this range (B1 and B2 lines) continue to be sold at a good pace and, as it is known, Kubota, with its majority stake in the Escort factory in India, also places this type of cheaper product on our market, under the brand name E-Kubota.
3 – I believe that resuming and launching this support as soon as possible would not only be fantastic for our market, but also a way to modernize the fleet with all the benefits, not only in terms of safety and environment, but also in terms of optimizing the farmers' operating costs. It should be much more comprehensive than the last one, where only a few farmers were contemplated, especially those from the most disadvantaged regions. Nothing against this aid, always supporting regions that are more distant from the decision-making centers and have greater difficulties, but it should also support farmers with a more professional profile and with the dimension to compete in various markets, many of them abroad.
4 – On our side, we will continue to be present at the largest events at national level (namely FNA and Agroglobal), where we will present our product solutions. We also continue, together with BNPLeasing, to seek the best financial solutions to help with the acquisition of equipment. We will keep working together with our dealer network and with the final customers so that, with Kubota, we can find the best solutions for their needs.
João Bizarro (Tractor Sales Director, CNH Portugal)
"Government should clarify if it will grant the supports again"
1 – The drop was expected. In the same period of 2022, many units sold under the write-off campaign were being delivered. The truth is that the market is not in decline only in the first quarter of this year, but since May last year.
2 – Because this is a more professional power range (51-120 hp), community support, or the lack of it, greatly limits registrations. There is also some uncertainty in some sectors, such as milk production, olives, almonds, and vineyards.
3 – At the very least, clarify whether this type of support will open again. Uncertainty leads potential buyers to hold back and, even if they need it, they end up postponing this decision. The last unit delivered under the previous campaign scored too high. A large part of the territory ended up not benefiting and, in my opinion, many farmers (even from more professional areas) were not covered. If the Government were to reinforce now with similar amounts as the previous campaign, using the projects already entered/not contemplated, it would reach the whole country and every type of farmer.
4 – Just to remind you, in the last 5 years, there were shortages of raw materials, lack of chips and connectors, difficulty in getting containers available, price of international shipping (in some cases it increased threefold), major constraints in the factories during the critical period in the pandemic, occupation of Ukraine, increase in the general cost of energy... Companies that sell agricultural machinery live in constant adaptation.
Trailers
The first quarter of 2023 brought some improvement in the trailer market compared to the final 2022 figures (-10.6%) but records 5.9% fewer registrations when compared to the first quarter of last year. There are, in total, 25 fewer trailers registered compared to the end of March 2022, even though Galucho, Rates and Joper have grown. Galucho, in particular, is going strong again in a new year: it has registered 117 trailers when a year ago it had only 68 registered. Except for the front trio, almost all the other brands fell, and the highlight here is Herculano: it won 2022 but has 50 fewer trailers registered in March 2023 than in the same period last year. Another highlight is that in March 2022, the 423 trailers registered were more distributed by brands, while now 55.02% (219) of the 398 registrations were made by Galucho and Rates.
CF Moto leads in ATV's and BRP reaches the top in UTV's
In an analysis of the ATV (All Terrain Vehicles) and UTV (Multitask Utility Vehicles) sales market in the first quarter of 2023, CF Moto surprises in the ATV sales leadership, registering a 58.33% growth: it registered 114 vehicles, 42 more than in the same period last year and 10 more than Linhai, the brand that ended 2022 as leader in this segment. In UTVs, CF Moto, which ended 2022 at the top after a very disputed year with BRP, saw the Canadian brand return to the leadership it also held at the end of the first quarter of 2022. Now, BRP has registered 42 vehicles, 1 more than in the same period last year and 4 more than CF Moto and Polaris. The latter is, in fact, the one showing the biggest growth in 2023, as it occupies the 3rd place, with 38 vehicles registered: + 280% compared to the first quarter of 2022. Finally, the significant rise in UTV sales (54.13%) and the residual drop in ATV sales (-3.22%) should be noted, compared to the figures between January and March last year.
21,07% drop in the Spanish market
The Ministry of Agriculture, Fisheries and Food (MAPA) of Spain released the data regarding the registration of agricultural tractors in the country in the first quarter of 2023 and the numbers are in line with what is happening in Portugal: 1,925 agricultural tractors were registered between January 1st and March 31st, 514 less than the 2,439 registered in 2022, which means a drop of 21.07%.
After having suffered a 19.75% drop in February, the numbers decreased in March and the forecast is that it will remain so until the "recovery plan" that is expected by the entire agricultural sector is implemented by the Spanish government. Even accounting for the figures for self-propelled machinery, trailers or telescopic trucks, the result is still negative (-1.27%) compared to the first quarter of 2022.
