It’s a promising and changing time for the rural equipment market, with some potentially negative undertones.
In the beginning of the year, you were optimistic. More than 64% of the respondents to our 2018 Dealer Business Trends & Outlook survey expected growth in the 2-8% or more range. We’ll see if that outlook holds for 2019. Please take a few minutes to complete our survey (www.RuralLifestyleDealer.com/2019TrendsSurvey) — the only one of its kind in the industry.
New home building is positive according to the National Assn. of Home Builders Wells Fargo Housing Market Index. The September index was at 67 (50 is neutral), down from 72 reported in January, but up from 64 recorded last September.
Demand for lawn and garden equipment among residential users is forecast to rise 2.9% annually to $7.9 billion in 2022, with commercial users trending slightly higher, according to a report from The Fredonia Group. They say to watch the DIFM (Do-It-For-Me) landscaping trend.
Compact tractor sales are also positive, according to the Assn. of Equipment Manufacturers. September year-to-date U.S. sales totals for under 40 horsepower tractors increased 9.7% over last year and 2.0% year to date.
Forecasts for the economy in general are not as strong, however. “Current indicators for our industry are concerning. Interest rates are heading up, tariffs are driving prices higher and home sales, a leading economic indicator for our industry, are down,” says Rex Collins, a Rural Lifestyle Dealer columnist and principal at HBK CPAs & Consultants.
Customer demographics are changing, too. Reports show that millennials are waiting longer to make major purchases and auto manufacturers like GM and Toyota are investing in ride-sharing companies.
A more direct hit on your dealership could be minimum wage increases. Amazon, the second largest employer in the U.S., recently raised its minimum wage to $15 an hour and says it will lobby Congress for increases to the federal minimum wage, according to the New York Times.
There are also rumblings among dealers about forced programs or commitments to the independent dealer channel. And, according to the Equipment Dealers Assn.’s 2018 Dealer-Manufacturer Relations survey, the aggregate mean score for tractor companies is down from 2017.
What You Can Do
There are steps you can take to prepare for good times and times that are not so good. “A good place to begin preparing for an uncertain future is to take a hard look at expenses. Start with the big five — data processing, insurance, personnel, advertising and interest,” says Collins.
Learn from each other. Borrow strategies from our 2018 Dealerships of the Year, Sherwood Tractor in the multi-store category and Ranchland Tractor & ATV in the single-store category. Congratulations to these outstanding dealers. Coverage begins by clicking here.
There is also much innovation in our industry that may buffer you from negative trends. Customers still want to buy and have properties to maintain, regardless of the economy. New technologies, such as robotics, ergonomics and telematics, will grab their attention. Cost-effective digital marketing techniques can help direct that focus to your dealership See what other dealers are doing in the feature, "Getting Results with Do-it_Yourself Marleting". Don’t delay. Start today.