For the machinery industry, the objective is clear. “Financing sells equipment,” says Sam Steinman, AGCO’s vice-president of sales. “The number one reason we offer financing is so we can keep the sale in-house at our dealers.”
Increasingly clear too, is that credit terms are the weapon of choice in the battle to get you to sign on the dotted line.
“Manufacturers offer finance incentives to help drive equipment sales,” echoes Kate Hamilton, manager, product market development, ag and turf, for John Deere Credit. “Finance incentives such as low-rate instalments or lease options are an excellent way to obtain a customer’s commitment to purchasing equipment.”
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It’s all about clinching the sale, which makes credit a great area to comparison shop among manufacturers, and even among dealers within the same brands.
It also makes credit a great area to sharpen your negotiating skills.
While the world has stumbled through the global financial crisis, Canadian farmers for the most part have managed to stay the course. For many farms, in fact, it’s not only been business as usual, it’s been full speed ahead.
According to a recent survey by Farm Credit Corp. (FCC), 51 per cent of producers in the crops sector plan to actually increase spending in 2009, with much of that increase directed at equipment.
That’s good news for farm machinery dealers, who saw record sales in 2008 and hoped the trend would carry over into this season. Even so, the market has shifted, with more focus on credit.
In part, that’s because today’s sales are being driven as much or more by record-low interest rates rather than record-high crop prices. It’s also a simple function of price. Sales are strongest in categories including high-horsepower tractors, combines, sprayers and seeding
WHERE TO FIND THE RATES
As always, a sharp negotiating tactic is to be up to speed on what your dealer’s competitors are ready to offer. In the machinery sector, it takes a bit of digging, but it isn’t impossible.
Interest rates and special incentives offered by machinery manufacturers’ credit companies change regularly, usually each quarter.
Added to that, rates and incentives vary depending on the model and type of machine. These websites list the current credit offers from several equipment manufacturers.
1. John Deere
2. All AGCO brands
3. Case IH
4. New Holland
agriculture.
5. Versatile
equipment, where farmers almost always turn to financing.
Despite this focus on financing, however, finding the best rate and the best lease or payment terms will require some legwork.
Still, there can be a big payback to that time investment. Most farmers have established a long-standing partnership with the financial institution of their choice. But taking a look around at the lending terms offered by others, most notably the equipment manufacturers’ credit companies, may be worth the effort, particularly if the machine you are interested in buying is currently in a sales slump. Manufacturers’ lending rates and incentives for them could be especially attractive.
In fact, in today’s marketplace, point-of-sale financing with incentives is becoming an essential component in sales strategies, with the additional benefit of convenient, one-stop shopping.
Although manufacturers are reluctant to disclose what kind of market share their credit divisions hold, an informal canvassing of some equipment dealers gives an indication of just how big a role it plays. That sampling reveals manufacturer financing is involved in up to 65 per cent of conventional sales agreements — although the numbers vary depending on the dealership. And that chunk is even larger when it comes to lease agreements.
The willingness of manufacturers to offer financing is also seen by many in the industry as a critical component in maintaining sales volumes. When asked if he thought his dealership could have made as many sales as it has without manufacturer financing plans, one general manager replied with an unequivocal “No.”
Also new is that nearly all manufacturers have now recognized the benefits of offering in-house financing plans similar to those of the four major brands. “One of the main drivers behind offering the retail finance program was brand loyalty,” says Adam Reid, marketing manager for Buhler Industries’ Versatile line, which launched a new financing program in October 2008. “It’s one more reason to buy a Versatile tractor.”
The financing plans offered by manufacturers are generally pretty attractive when it comes to interest rates and terms. “We try to come in a couple of
For the machinery industry, the objective is clear. “Financing sells equipment,” says Sam Steinman, AGCO’s vice-president of sales. “The number one reason we offer financing is so we can keep the sale in-house at our dealers.”
Increasingly clear too, is that credit terms are the weapon of choice in the battle to get you to sign on the dotted line.
“Manufacturers offer finance incentives to help drive equipment sales,” echoes Kate Hamilton, manager, product market development, ag and turf, for John Deere Credit. “Finance incentives such as low-rate instalments or lease options are an excellent way to obtain a customer’s commitment to purchasing equipment.”
It’s all about clinching the sale, which makes credit a great area to comparison shop among manufacturers, and even among dealers within the same brands.
It also makes credit a great area to sharpen your negotiating skills.
While the world has stumbled through the global financial crisis, Canadian farmers for the most part have managed to stay the course. For many farms, in fact, it’s not only been business as usual, it’s been full speed ahead.
According to a recent survey by Farm Credit Corp. (FCC), 51 per cent of producers in the crops sector plan to actually increase spending in 2009, with much of that increase directed at equipment.
That’s good news for farm machinery dealers, who saw record sales in 2008 and hoped the trend would carry over into this season. Even so, the market has shifted, with more focus on credit.
In part, that’s because today’s sales are being driven as much or more by record-low interest rates rather than record-high crop prices. It’s also a simple function of price. Sales are strongest in categories including high-horsepower tractors, combines, sprayers and seeding
