Tractor prices up 20 per cent, expected to ease

See which secondhand tractors are most in demand, and find out what to expect from prices once EOFY deals are done.

The unrelenting farm machinery sales frenzy of the past two years has finally eased, ushering in a new era for the sector and some good news for buyers.

Anyone shopping for tractors or equipment in the 2023-24 financial year can expect more reasonable delivery times for new machines, more availability of parts and more relaxed sales agents and service technicians, whose frantic work pace is returning to a more manageable level.

Tractor and Machinery Association of Australia executive director Gary Northover said dealers and manufacturers expected buyer demand to fall this year, off the back of extraordinary growth. But, he also anticipated a “soft landing” for sales.

“In the two calendar years 2021 and 2022 we had annual sales in the order of 19,000 tractors, which is about 50 per cent up on what has previously been described as a strong year,” Mr Northover said. “In the past, 12,000 tractors was always described as a good year in the industry.

“The turn of 2023 has seen what we are describing as a return to normal.”

Tractor sales hit a record high by volume and value in 2022, with about 19,000 units sold (17,702 through channels officially tracked by the TMA), worth a whopping $2.1 billion, up 3 per cent on the previous year, and up a huge 33 per cent on the five-year average.

Since January, however, the market has quietened, with sales volumes down every month compared with last year. Value, however, has not taken as big a hit due to price rises and continued demand in some horsepower categories.

“Really what’s happened is the volume of large machines has been strong this year,” Mr Northover said. “It is really that lower end of the market that has seen the biggest declines.

“What we describe as the leisure market (under 60hp), which is more interest-rate dependent.”

Mr Northover said prices had gone up significantly compared with year-ago rates, but in good news the hikes had most likely hit a peak and were expected to plateau.

“There is no doubt they have gone up,” he said. “By how much depends on what size category, what country of manufacture, and what brand you talk about. But figures in the 20 per cent range aren’t uncommon.”

Tractor and Machinery Association of Australia executive director Gary Northover says the industry expects tractor sales to return to about 12,000 a year after two years of stellar growth.

Major dealerships confirmed price rises had been steep over the past 12-18 months, as cost increases across the supply chain were unavoidably passed on to buyers.

Brandt wholegoods inventory manager Anthony Glass said the John Deere dealership network expected price changes this coming year would “not be as extreme as what we have been seeing”.

Case IH Australia and New Zealand general manager Aaron Bett said the company also “would not expect similar price rises going forward”.

Mr Northover said contributing factors included an increase in steel prices due to the war in Ukraine, restricted staff numbers in manufacturing plants and along the supply chain due to the pandemic, a shortage of wiring looms and electronic componentry and a spike in the cost of energy globally.

“As factory productivity improves – and American manufacturers are quoting general machinery manufacturing sites are down to 75-80 per cent of productivity – and as shipping prices and availability improves, we would expect competition would bring pricing back to a realistic level,” Mr Northover said. “This is a bit of a spike is the expectation.”

New John Deere machinery has gone up in price over the past two years, but the manufacturer expects the trend to plateau.

USED TRACTORS AND MACHINES HOLD VALUE

Second-hand farm machinery prices have continued to hold firm, after two years of steady gains that helped fuel a sales bonanza in the new market.

Now, despite new tractor sales slowing, used machinery listings online are maintaining strong volume and values, according to data from classifieds website farmmachinerysales.com.au.

Head of sales Dianna Bouwmeester said the median “delisted” price of used tractors on the site in April was $96,250, up 1 per cent on the same time last year, while the median delisted price for new tractors was $75,500, down by 10 per cent year-on-year. Compared with April 2021, however, the median delisted price of all tractors across the site was up by 10 per cent.

“Prices have stayed relatively steady,” Ms Bouwmeester said.

“In terms of delisting prices, that is the best source we have as to what (prices tractors are) being sold at.

“And when we look at the median prices for equipment, including seeding, hay and silage, they have increased.”

Tractor inventory was up 20.3 per cent compared with April last year.

“This time last year saw our lowest volume listed on site,” she said, explaining the huge demand for tractors during the pandemic, coupled with supply-chain bottlenecks and great tax incentives contributed to shortages of stock across both used and new markets.

And despite a slight dip in online searches for tractors in March, interest had again picked up.

“Often we will look at search volume to see how the market is tracking in terms of future demand,” she said.

“In the past 12 months, it has pretty much remained steady across the searches.”

With 5.3 million searches for tractors on farmmachinerysales.com.au over the past 12 months, demand was likely to remain strong, Ms Bouwmeester said.

The 200hp segment was holding its median delisted price well, she said, while median delisted price for tillage and seeding equipment was up 28 per cent, and hay and silage was up 46 per cent compared with last year.

Of the 29,078 items listed on the site, 70 per cent is used, while 30 per cent is new.

TOP 10 MOST SEARCHED TRACTORS, MARCH 2023

1. John Deere 6155M
2. John Deere 7230R
3. John Deere 6110M
4. John Deere 5055E
5. John Deere 8400
6. New Holland TT4.75
7. Case IH Maxxum 125
8. Case IH Magnum 340
9. John Deere 9520R
10. John Deere 8520
Source: farmmachinerysales.com.au