AGCO, the home of three major tractor brands in Ireland, has been busy patting itself on the back with regards to its ongoing profitability, as well as talking about its long-term plans.
Total global sales in the third quarter of 2022 amounted to $3.1 billion, up 14.3% over the same quarter last year, an increase which was led by higher sales in South America, although all regions fared well.
Healthy rise in income
Here in Europe, total sales for the first nine months of 2022 were up 10.6%, which is somewhat at odds with the reported downturn in unit sales over this year.
The explanation from AGCO states:
“The improvement was driven by higher sales of tractors and replacement parts along with favourable pricing actions. Strong growth in France, Turkey, central Europe and Scandinavia accounted for most of the increase.”
South America, however, saw a much more significant rise in income of 56.1%, due to much the same mix of factors, but to a far greater degree.
Historical sales figures tell us only where a company has been, they give little clue to the future and it is these forecasts and revelations which offer a little more interest.
Fendt on the up at AGCO
Most of the news released over the last month regards Fendt, which has become the apple of the corporation’s eye of late.
Following on from the fanfare of the extension to the Vario 700 series last month the company has revealed big plans for the brand going forward.
These revolve around two major developments. The first is the building of Fendt as a full-line supplier of machinery, and the second is the push to increase its market share in North America.
One-stop shop for precision agriculture
Fendt already has a wide range of forage and harvesting equipment in its livery, but this is to be supplemented by tillage machinery, certainly in the US where its range of Momentum seed drills is already established.
To help increase its overall share, the company is to appoint a whole new tranche of Fendt dealers. There are already 70 active in the country and these are to be joined only by those who are willing to commit to the Fendt way of doing things.
Meanwhile, Massey Ferguson dealers that don’t measure up to AGCO’s revised expectations are to feel the heat with plans by the parent company to consolidate the dealership network in the US.
It is not only the dealers that are to suffer the scythe. Massey Ferguson currently offers 18 different ranges, this is to be cut back to just 10, alongside the dealership cull, although AGCO intends to maintain the total number of outlets.
Cheaper without chips
There is also the suggestion that the Massey Ferguson brand will become relatively less expensive, as the company noted at SIMA that they “plan to target budget cautious farmers with it”.
SIMA is an international exhibition of technologies and solutions for efficient and sustainable agriculture which took place in France earlier in November.
Stepping back from the nitty gritty of it all, it does look as if AGCO is repositioning its brands to cater for a growing divergence of demand from farmers.
While there is a great deal of talk about digital technology being a panacea for all of farming’s woes, it is not for everybody, especially in the US where the majority of tractors sold are under 100hp.
AGCO may well have taken note and is now placing Fendt as the techno brand and Massey Ferguson tractors as being more basic, but capable of being dressed up with all the latest wizardry.
Quite where all this leaves the third major branch of the family is unclear. Valtra has always done its own thing and has come on great strides over the last 20 years or so, especially in Ireland where it is now considered part of the mainstream.
The company is well established in South America through its Brazilian subsidiary which has a legacy stretching back over 60 years, yet the AGCO board still feels the need to double the Fendt dealership network in the region.
However, there is no mention of the Nordic branch in any of the recent statements from the company, the focus clearly being on developing Fendt which, being packed with electronics, is very likely to be the most profitable of the three brands.