Machine price increases imminent

January 2021 was another outstanding month for machinery sales by all accounts, according to the Tractor and Machinery Association of Australia’s (TMA) latest sales report, but the organisation warned of “modest price rises” in the horizon as a result of rising shipping costs.

Tractor sales were up 60 per cent YOY in January, a stark contrast to bleak market conditions just 12 months ago.

“It’s a reminder of how quickly the industry recovered from that period. As we have reported previously, the country was still in a state of severe drought, bushfires were raging along the east coast and this strange phenomenon known as COVID-19 first emerged,” said TMA executive director, Gary Northover.

“The challenges with supply that were first seen mid last year continue and we expect this to be the case for much of the year. Suppliers are beginning to report some cost increases with shipping and these are likely to see modest machine price rises as a result.”

Activity was strong across all states with NSW again the standout, up a whopping 111 per cent on the same time last year. Victoria reported a solid lift of 30 per cent, while Queensland was up 63 per cent.

Sales in Western Australia picked up by 47 per cent YOY, while South Australia and Tasmania finished the month 24 per cent and 68 per cent up from last year.

The increase in sales numbers is spread evenly across the four reporting categories, with the strongest increases seen in the categories supported by the Instant Asset Write off scheme. The under 40hp range was up 81 per cent for the month while the 40 to 100hp range was up 56 per cent. The 100 to 200hp category was up 42 per cent.

The 200hp and above range enjoyed its first increase for some time, up 73 per cent on January last year.

“It is this range that appears to be the hardest hit by supply constraints with reports of long lead times common,” Northover said.

“For products under 200hp, we are seeing lead times on factory orders being extended by around six to eight weeks, however this can be two to three times greater for the larger machines.”

The TMA is expecting combine harvesters to be similarly affected, with order numbers strong but supply issues to be equally present.

Baler sales were in line with the same month last year and are expected to remain strong in 2021. Last but not least, sales of out-front mowers are holding strong, up 124 per cent from the same time last year.

“As we look forward to 2021, most suppliers are predicting a continuation of the strong levels of demand underpinned by both the ongoing favourable weather conditions and the Instant Asset Write Off Scheme,” Northover said.

“We do however expect to see some unevenness in supply as the main manufacturing centres in North America and Europe continue to struggle with the impacts of the Coronavirus. This may lead to some ‘lumpiness’ in sales reporting however, we expect this year to be another strong one.”