Ag Equipment Intelligence, a sister publication to Rural Lifestyle Dealer, recently released its "Big Dealer" Report. The report tracks ownership changes and consolidation trends of North American farm equipment dealers and is produced jointly with George Russell of the Machinery Advisors Consortium.
Russel says what is happening now in the industry is the "second wave of dealer consolidation." During this phase of dealer amalgamation, Russell says big dealers are combining with other big dealers. "The most activity we've seen in the past few years has taken place in the group of deaelrs who operate 15-19 stores. I would not be surprised to see another 5-7 dealerships join the 15-plus group in the next year. I'm sure almost all of them will be Deere dealers."
Russell also points to Kubota’s desire to be a global full liner as a significant shift in the industry. “This is changing the dynamics in North America,” he says. “As Kubota moves from a shortliner model to a full liner model and expands their dealer development, they are now more of a threat to the other major manufacturers, but they also represent an opportunity for dealers.”
There’s little doubt that the major tractor brands are looking over their shoulder at Kubota. The Japanese tractor maker is often credited for fully developing the compact and utility tractor market, which it continues to dominate today. According to UCC filings*, through the first 11 months of 2016 Kubota held a market share of nearly 47% in the tractor ranges up to 80 horsepower. Deere was a distant second with 19%.
Now Kubota has set its sights on moving up into “big ag” equipment and with its track record for growth, as well as dealer and customer loyalty, it could pose some serious competition for the major equipment makers. The limiting factor for Kubota, as it has been for many of the specialized farm equipment makers, is expanding its dealership network. While the company boasts more than 1,000 North American dealers, according to a company spokesperson, only about 55% are “Kubota-only” dealerships, and it shares lot space with other big name equipment makers, most notably the CNH Industrial brands of Case IH and New Holland.
Responding to the “Kubota threat,” some of the other manufacturers are adopting strategies to stave off growing competition from the company’s strategy to move into the big ag segment. For example, Deere has given additional emphasis to its under 90 horsepower tractors, where Kubota is strongest. In its 2017 marketing campaign, Case IH is reacting to Kubota’s entry into the hay and forage market with the purchase of Kverneland a few years ago, by emphasizing its hay tools and smaller tractors.
*UCC data is not considered to be complete as there are no regulations making the sales or registration filings mandatory. As one reader recently wrote, “UCC data provides part of the picture, but certainly not the whole picture.