Is Inventory Strangling Your Neighborhood Equipment Retailer?

In the wake of the COVID-19 pandemic, the equipment dealership industry experienced unprecedented shifts in inventory dynamics, shaping the current landscape for buyers. This YouTube video delves into the nuanced details of how the pandemic-induced disruptions, coupled with shifting consumer behaviors, have created both challenges and opportunities for buyers in the market.

As people gravitated towards rural living and redirected spending from vacations to investments in machinery, in 2020, equipment demand soared while inventory levels plummeted to record lows. However, as the disruptive phase subsided, a new reality emerged. Dealer orders flooded in en masse, and a softening in demand and ushering in a buyer's market.

The narrative is particularly pronounced in the lawn and garden sector, where dry weather conditions exacerbated the demand slump. Yet, with the arrival of Spring, dealers are strategically managing aged inventory, offering attractive prices to entice buyers.

However, the crux of the challenge lies in the outdoor powersports segment. Dealers, who aggressively transferred inventory during the pandemic, now grapple with mandatory replenishment programs, perpetuating surplus inventory situations. Replenishment programs, especially in side-by-side vehicles, pose significant hurdles for dealers seeking to balance inventory levels.

Interestingly, while tractor attachments also face surplus demand, dealers have successfully curtailed orders, mitigating inventory imbalances. Replacement units remain readily available at manufacturer locations, shifting the inventory burden more towards manufacturers than dealers.

So, what does this mean for customers? The surplus inventory landscape presents buyers with unprecedented bargaining leverage. Although pricing may not revert to pre-COVID levels, buyers can anticipate subsidized financing programs and narrower dealer margins, enhancing the buying opportunity greater than what will be coming when inventory levels are brought in line with demand.

Moreover, market forces may drive some dealers to retire, close, or merge with others, compelling manufacturers to absorb excess inventory. This could potentially trigger industry-wide shifts, including manufacturer closures or consolidations.

In this informative video, we explore the intricate interplay between supply, demand, and market dynamics, offering valuable insights for equipment buyers navigating the current inventory landscape. Stay tuned to learn how to leverage these market conditions to secure the best deals and make informed purchasing decisions.

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Copyright 2024 Tractor Mike LLC
00:00 Introduction
01:24 Lawn & Garden and Dry Weather
02:41 ATV & UTV Replenishment Challenges
05:32 Attachments Available from OEM's
07:53 Dealerships & Manufacturers Going Away?

[whatnotzone]

My local Kubota dealer wants $28k for an L2502 Hst. That's before financing fees, assembly fees, and sales tax. Utv's cost $15k to $30k.
That's why the inventory is piling up!

[unemployedredneckhillbilly]

I have been thinking about a new Kubota tractor and they are offering good rebates but the price increases have basically negated the rebates this year. Now looking at a Kioti equivalent that I would have never considered in the past. Consumers also have to adjust loyalty to keep up with inflation. Lots of inventory on the lots around me for the first time in years but it seems to just be sitting.

[lifeonwindyhill]

I think today’s economy has caused buyers to hit the pause button, in addition to the comments on the video. Good interview Mike.

[johnhelbig]

We sold our Missouri dealership at the end of 2020. In the fine print of our manufacturer’s contract was the rule that the new inventory would only transfer to the new owner IF that inventory was less than 24 months old. So at the end of the day, we had all our used inventory and some “aged” new inventory that we had to move to another lot and continue selling. We (the two owners) chose to continue selling it retail, rather than auction it and it took about 12 months or so to get all those pieces gone.

[andrewdonohue]

I have a bx2350. It's almost 20 years old. It needs a seat and has a small steering leak. It's otherwise mechanically decent. Not paying these prices

[jeffshiner]

Good video and a tough situation. It will be interesting to see if the second hand market will similarly become flush with product from those who bought over the last few years.

[WS-gcdf]

The sound and echo in the room is not good in my opinion...

[johnc]

Rational people won't buy these new machines they are to expensive.

[mikeskidmore]

The Dealers should be able to approve what gets ordered AI should be just a suggestion .

[Spitzer]

In my opinion prices will not come down. I think prices will stall until wages slowly creep up.

[KPVFarmer]

Prices and interest rates being up are causing many to not even step on the lot and especially making big purchases.

[davidmount]

It’s hard enough just to survive let alone buy non necessities

[jamielawson]

What I see as the 2 big reasons the public has hit the pause button, and I'm in that group, is the country's economy is a disaster and waiting to see if the people wake up and take their country back, and the outrageous prices on the equipment. A new side-by-side is $20, 000.00 and up, and many times used side-by-sides are $15000.00 and up. 98% of working people can't afford those prices in this train wreck economy.

[frankwrogg]

Does not help that some utv cost as much as a cheap car