MILWAUKEE, Wis. – In looking over farm equipment sales numbers from the first half of the year, an official with the North American Equipment Dealers Association said dealers are pleased to see that inventory is catching up with demand for some bigger equipment.

“It appears production is catching up on large combines and tractors,” said Kim Rominger, CEO of the organization. “(These are) the sectors that have been behind the most and hardest for dealers to get. All I speak to are glad that inventory is coming in.”

According to the Association of Equipment Manufacturers (AEM), sales of self-propelled combines were up 51.5 percent in the first half of the year over the same period last year. Sales of four-wheel-drive tractors increased 45.5 percent, and two-wheel-drive tractors of 100 HP or more rose 9.4 percent.

As for smaller tractors, sales of two-wheel-drive models under 40 HP were down 13 percent, and those 40-100 HP fell 8.2 percent. Sales of all two-wheel-drive tractors dropped 10.2 percent, according to AEM.

“The drag on small units now is most likely due to the fact that so many of these units go to consumers or urban area landscapers,” he explained. “Housing starts are down. Homeowners are not spending money as they were a year or more ago due to the economy. Homeowners have reduced their expenditures on improvement and new equipment drastically.”

Even with some improvement in inventory, Rominger said supply chain issues are still a concern.

“Dealers are getting more stock but not everything they want. The bigger issue is some parts are still hard to get and that is causing delays in repairs and upgrading used trade-ins so they can be moved quickly.”

The timing of when inventory arrives is also impacting dealers, he noted. Some equipment is coming past season and may have to sit for a while to be moved, Rominger said.

“Many of the units arriving have been pre-sold and if the used trade-in has not been taken yet, we will see more of this inventory reduced in value due to more usage hours on the unit than were figured in the deal when made. There are a number of issues here for dealers.”

Curt Blades, AEM’s senior vice president for industry sectors and product leadership, touted sales for June 2023 over June 2022 as positive signs moving forward.

“Year-over-year sales comparisons this month are now starting to compare to 2022 sales that were closer to the five-year average, and less informed by the after effects of the pandemic,” he said in a release. “At the same time, the continued strength in larger tractors and combines still owes some to the strength of commodities markets, and the appeal of more efficient technologies available on modern equipment.”

Rominger said a big factor currently for farmers and consumers is rising interest rates. The increased rates impact dealers in two major ways, he pointed out: rates they can offer their customers on financing units, and the floor-plan interest rates that apply to dealers to maintain inventory until sold.

“All of these rates are rising on a regular basis and as the Federal Reserve continues raising rates to fight inflation, it will impact dealers in terms of inventory sitting on the lot and slowing sales increasing their costs.”

Over the next 12-24 months, the economy will play a large role as to how dealers handle getting inventory in and moving both new and used units, Rominger said.

Commodity prices are also a key concern, he stated. “As inventory gets back to normal but demand is down, both new and used inventories can be expected to rise. Many new units coming in now have been pre-sold. Used unit inventory will likely rise. (There are) issues of carrying used units for an extended length of time. Equipment is not like wine and generally doesn’t appreciate over time sitting on a dealer’s lot.”