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Published 2022.09.23
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Tractor Mike

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Latest tractor sales numbers are out and, at first blush, it looks like small tractor sales are tanking.  Total numbers of under 40 horsepower tractors sold year-to-date through August are down a whopping 17.6% from last year while inventory is up almost 25,000 units.  Sounds like a buyers market, right?  Well, no, at least not yet.

To understand where the tractor market is, you must first comprehend how massive an impact the Covid mess had on it.  It caused more people to move out of cities and with it, they had money because they couldn't vacation during the lockdown.  Tractor sales under 40 hp went up 17% in 2020 and another 11.6% in 2021.  At the same time, the number of tractors available for sale fell to 26% of sales, the lowest number that I can ever remember.  There was more demand and less supply.  Buyers had to take what they could get and had no bargaining power.

The drop from last year in sales and increase in inventory shows that the market is getting back to normal.  If you compare this year's sales to 2019, the last year before Covid; we're still up a little less than 10,000 units in sales, while inventory is still about 22,000 units below levels seen that year.  So, if you're a buyer, your situation is improving, but it's still not to the point where sales and inventory levels are out of whack and there are great discounts to be had.  It is headed in the right direction.

40-100 horsepower tractors experienced about the same changes that the small tractors did over Covid, they were up 10.6% in 2020 and 14.1% last year.  They're down 12.6% this year from last, but still 4,000 units ahead of where they were in 2019.  

The under 40 hp inventory currently stands at 52% of year-to-date sales, the 40-100 hp inventory stands at 56% of sales.  Optimal would probably be about 65-70% of sales, or less if the manufacturers could get by with it.  Their profit picture would look best if they could get by with no inventory and delivering only tractors that are sold.

Finally, the over 100 hp tractor market and combine markets are both up as farmers try to cash in on escalating crop prices and global food shortages brought on by the Ukraine war and drought.  4wd articulated tractor sales though are down, likely as a result of historically low inventory levels.

In the end, things are getting back to normal with tractor supply and demand after the Covid mess, they still have a way to go to be balanced again. 

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