12 November 1999

BIGSAVINGS IN FLEET DEALS

Any business is welcome for tractor manufacturers and

dealers. But while any dealer worth his salt will put a degree

of effort into securing single-tractor sales, its the fleet deal

that really gets the adrenalin flowing. Peter Hill reports

IMAGINE signing an agreement to buy not one or even a couple of brand new tractors but a dozen or more. A million pounds-worth of business, at least, in one go.

Such deals are pretty rare. But those who place them say that, despite having to find a big lump of a deposit to seal the deal, the sheer scale of bargaining power means they still come out ahead over the anticipated working life of the machines.

To the sellers then, the fleet deal is a mixed blessing. Its nice to get the business, of course. But with margins pared to the bone, such sales have to be seen in terms of long-term gain from servicing and parts supply more than a big contribution to sales revenue.

Potential difficulties in meeting delivery deadlines (no tractors are built for stock these days) can make life awkward once the deal is struck. And then there is the risk of putting in a lot of time and effort only to lose the contest with little prospect of a second chance for some time to come.

The challenge for manufacturers and the dealers man at the sharp end of negotiations, is to price the package well enough to win the business without giving the machines away.

The challenge for buyers is to hold out for a reasonable price that makes the bulk purchase worthwhile without screwing the supplier to the extent that future back-up is compromised.

Quite rightly though, the emphasis should not always be purely on price.

"Although money is always an important consideration, it was not the prime factor when we placed an order for 12 New Holland tractors with Haynes Agricultural," says Richard Bezant of Wadhurst Park, Kent. "In fact the proposal was not the cheapest. We chose the dealer because it had worked hard to put together a superb overall package suited to our needs."

Service back-up

Competitive pricing apart, the package put together with the 1215ha (3000-acre) farming enterprise, included a promise of responsive service back-up, an extended warranty (over the terms for which New Holland had to be a little flexible) and a finance structure that, along with the three-year warranty, helped Wadhurst calculate life-time operating costs for the fleet with some certainty.

"We committed ourselves to delivering the best possible back-up," says Peter Innes, who negotiated the deal for Haynes Agricultural. "But that did not involve expressing any greater commitment than we would make to any customer."

The shopping list comprised a mouth-watering selection of a dozen tractors from 100hp to 240hp. A mixed bag to suit Wadhursts livestock and arable activities – six 100hp TS110 models, a heavier 100hp 8160 and two 160hp 8360s from the top end of the M/60 series, plus three range-topping 240hp 8970 tractors.

New Hollands openness about the yet-to-be launched TS series replacements for the Series 40 tractors scored vital points with Wadhurst. The company plans to keep the fleet intact for a number of years and clearly did not want to buy tractors that would soon become outdated.

"It was a competitive deal and New Hollands progressive outlook was a major factor in helping us reach our final decision," says Mr Bezant.

Negotiating such a deal requires patience on both sides as well as clearly identified objectives and clearly defined requirements.

"That meant understanding what the customer wanted in terms of power and features, then seeing how we could meet those demands, as well as those for after-sales back-up and finance," says Peter Innes.

The process took some two years in all, beginning with Wadhursts evaluation of its "green" fleet, drawing up a list of appropriate replacement machines, and inviting three manufacturers to quote, then enter negotiations.

With so much at stake, it is a worrying process for the dealer, as it goes through a process of fine-tuning the package and building the potential customers confidence.

"It was hard work and a bit nerve-wracking," confirms Mr Innes. "But I enjoyed it, especially when we got the business, which made up for our disappointment when the decision went against us the time before."

The formation of a co-operative contracting venture, to provide the power and machines for members individual farming operations, led to a 15-tractor fleet deal for John Deere dealer Ben Burgess, in Norwich last year.

Sharing deal

Progrow resulted from a history of vegetable machinery sharing between Norfolk growers which then saw the logic of extending the principle to arable tractors and equipment. The aim was to win economies of scale from using equipment on a much bigger acreage.

Rather than try to mix and match the existing fleet, it was decided to change almost all the members existing tractors.

"This gave us the opportunity to work out exactly what we needed in terms of horsepower and types of tractor," says Progrow joint managing director Bob Brewer of Transacre, Burnley Hall, East Somerton. "It was like starting with a clean sheet of paper and we were completely open minded about which make we would choose and which dealer we would go with."

When the order was finally placed with Ben Burgess, it comprised three 260hp John Deere 8400 tractors, including one rubber-tracked version, a 155hp 7710 and 11 models from the 6010 Series.

The three biggest tractors are the mainstay of the autumn cultivations and sowing routine; the two wheeled models operate ploughs to bury stubble and other surface trash, while the tracked machine follows up with a disc cultivator drill.

First task in arriving at this final mix was to draw up detailed work plans to cover the different field operations involved in arable and vegetable crop production, and to then calculate the size of implements and tractors needed to operate them.

"That took an awful lot of detailed work but it was not until it was done when we could start talking to potential suppliers," explains Mr Brewer. "After that, it was a case of fine tuning what we needed according to their suggestions and the relative performance, as they saw it, of comparable models under consideration."

As the deal moved on, other key elements to take into account included machine reliability, service back-up, finance and resale values. To some extent these are worked out in the early stages because there is clearly little point inviting a quotation from a source in which buyers are less than confident on these fundamental aspects.

"If you know a machine is troublesome or unreliable, you simply dont buy it," notes Mr Brewer. "But when you have several good contenders, the job becomes more difficult. Price and finance is very important, of course, but we also had to have complete confidence in the dealers ability and willingness to respond and deal with problems quickly and effectively."

That is not to denigrate the dealers who did not get the business this time round, he emphasises. In the final analysis, it was Burgess and Deere that came up trumps. &#42