TRENDTOWARDSRISING HORSEPOWER GOESON
TRACTOR horsepower continues to rise, according to the latest figures from the Agricultural Engineers Association, which show 116.6hp to be the average size.
This rise has materialised from a total of 1,279,000hp sold into the UK market last year, up 22% compared with 1998.
"There is no doubt that farmers are buying more horsepower when tractors are changed," says Chris Evans, economist with the AEA. "And although we do not expect tractor registrations to rise by much more than about 500 units compared with last year, we are confident that average horsepower will continue to rise as many farms consolidate their operations."
While registrations of 70hp and below recorded a fall of about 30%, the other end of the scale showed a better response as tractors of 141hp and above rose by 57.5% compared with 1998. Similarly, the 91-100hp sector rose by 6%, 101-110hp increased by 23.4% and 121-140hp was up by 31%.
But with such a rapidly changing industry, it is difficult to see where the market might be heading. And while dealers might report the sales of six new tractors, for example, they could have taken a much higher number in part exchange, which has the effect of shrinking the total volume remaining in the market-place.
"It is not unrealistic to see the tractor market drop even further in the short term as massive restructuring could see fewer but ever more powerful tractors finding their way on to farms," says John Deere managing director, Alec McKee. It is a scenario which could suggest that the AEAs 11,500 tractor registration forecast for 2000 is optimistically high.
Parts sales fall
"We have noticed that parts sales are dropping off, which is a direct result of tractors becoming more and more reliable," says Mr McKee. "If we can listen and react to customers requirements while staying on top of such a rapidly moving market, then our tractor business should continue in a steady, upward direction."
Despite the possibility of such turbulence ahead, Peter Stead Case IHs sales director for UK and Ireland, reckons the firm is in for a buoyant period over the next 12 months, after having a reasonably good year in 1999.
"Last year proved to be quite good for Case, as the total market was stronger than we predicted," says Mr Stead. "Our market share strengthened throughout the year, particularly with tractors over 100hp.
"Sales of MX Maxxum were strong and the newly introduced MX Magnum outsold our expectations."
In 1999, MX Magnum sales were 65% higher than expected, while Quadtrac sales exceeded our forecast significantly by an impressive 275%.
For 2000, Mr Steads outlook remains positive and he reckons the industry has been stronger than predicted in the first two months of this year.
"We hope to build on our 1999 successes, and demand for the higher horsepower tractors remains strong," he says. "Sales to the livestock sector are also beginning to pick up and early indications suggest that tractor sales below 100hp will be better than in 1999."
Finnish tractor maker Valtra reckons its marketing agreement with Claas is proving to be one of many useful aspects of its recent sales success. The next step is to grow market share organically, relying on new products and more electronic business.
Examples include the high horsepower S series tractor range – previewed at last years Agritechnica – due for launch in 2001, and a recently launched internet service which is currently only available for customers in Finland.
Range of machines
"S series will give Valtra a range of tractors to compete in the 200-260hp sector," says John Nicholls, marketing manager of Valtra Tractors (UK). "The high horsepower sector is an important area in the future development of UK and European tractor markets."
And although Valtra estimates that demand in Europe will fall slightly during 2000, the company believes its market share in the UK will continue as a result of its strongly developing dealer network and its pick-your-own system of buying exactly the tractor specification you want.
"In future, the integration of more information technology in the design of tractors, along with new and improved services for our customers should provide Valtra with a new competitive advantage," says Mr Nicholls.
Renault too, sees the 200hp-plus sector as the next big area of expansion.
"We have had to develop a tractor for the over 200hp sector to meet future demand," says Bob Humphrey, co-managing director of Renault Agriculture. "We have seen the average size of Renault tractors sold rise from 100hp to 130hp in only two years and it wont stop there."
But recognising that product alone wont help the firm fulfil its aim of doubling European market share in five years, Renault is investing £140m in its retail network and the appointment of high quality dealers. The reorganisation of some manufacturers dealer networks is also proving timely for the French maker.
"Many dealers see their independence under threat. They do not want to be dictated to and are looking at the possibility of relinquishing franchises, but we are also seeing good dealers being dropped as networks are rationalised," says Mr Humphrey. "This can only be to our advantage, as it gives access to high calibre dealers, which in the past has not been possible and so held Renault back." *