VDMA Agricultural Machinery: Sales trend moves away from record level of previous years

Although the agricultural machinery industry was able to maintain its level of turnover in 2014, almost reaching the record heights of the previous year, sales of agricultural machinery and tractors are now declining appreciably. The VDMA Agricultural Machinery Association anticipates worldwide production this year will be reduced by around ten percent to approximately €90 billion.

Consolidation expected on established markets

However, this figure would still be significantly higher than the average of the last ten years. “Since the last recession in 2009, the industry has experienced a huge boom. This is now well and truly over”, said Dr. Bernd Scherer, Managing Director of the VDMA Agricultural Machinery Association, at the presentation of the latest Economic Report. He went on to say “We are expecting the markets to consolidate from now on, especially those established markets in Europe and America, although attractive opportunities for expansion continue to open up in several of the newly industrialised countries.”

Business climate cools worldwide

As is evident from the low backlog of orders, the business climate for leading agricultural machinery companies has cooled across the globe. One in two Western European and North American managers currently rates their business outlook as ‘unsatisfactory’ according to a survey coordinated by VDMA.

The European Union and North America make up around 55 percent of the world market for agricultural machinery and therefore set the tone for global trends. Primarily, a heavily saturated market is currently taking its toll – this is mostly due to the very high level of investment in farming over the last three years. In addition, incomes for farmers are lower on account of falling prices for agricultural products. As a result, in the first half of the year demand for new machinery fell in some cases by more than 20 percent.

Growth trends in East Asia and Turkey

The sales markets in South America and Eastern Europe are also weak. However, the difficulties on these markets are also due to the overall economic situation which has led to a sharp fall in government investment support schemes. The harvesting machinery business in Russia is proving particularly challenging as it is well known that it is still struggling with inflexible import restrictions. However, there has been noticeable growth this year in the Japanese, Chinese and Turkish markets for agricultural machinery.

Get Our E-Newsletter - breaking news to your in-box twice a week
Will be used in accordance with our Privacy Policy
Share.

About The Author