New tractor sales boom continues

Improved optimism amid better weather conditions and the Government’s generous tax incentives have continued to push sales of tractors and farm machinery to their highest levels in years, said the Tractor and Machinery Association of Australia (TMA).

According to the organisation’s May 2020 sales report, tractor sales had a year-on-year increase of 30 per cent for May and are now 12 per cent ahead on a year-to-date basis.

For the first time in years, all states have reported a year-on-year increase in new tractor sales, including NSW and Queensland which have both been hit hard by the drought in recent years; as well as Western Australia which has seen a dip in sales in recent months.

Victoria is up 32 per cent on the same month last year, now 24 per cent ahead for 2020. NSW recorded a strong 38 per cent YoY increase, now 12 per cent up year-to-date. Queensland had another strong month rising 34 per cent compared to last May and now sitting 10 per cent ahead of last year.

The improvement in South Australia continues, 13 per cent up for the month and now 16 per cent ahead of last year whilst Tasmania reported another strong month and is now 21 per cent ahead for the year. Western Australia notched an increase in sales for the first time in a while- seven per cent up for the month and 11 per cent down YTD.

“With three consecutive months of above average sales, the industry has resumed a level of activity that will give some comfort to dealers after what has been a torrid two year period,” said TMA executive director, Gary Northover.

“The news on the weather front keeps getting better and demand for commodities remains extremely strong, even despite some trade tensions with China.”

Northover added the Government’s generous instant asset write-off boost to $150,000 was a huge catalyst in the increase in sales and purchasing appetite.

Following the Government’s announcement today that the program will be extended to December 31, well beyond the original deadline of June 30, 2020, it is hoped that sales growth will continue well into the year to stimulate an economy in recession.

However, if demand was to continue its upwards momentum over the coming months, supply could be an issue due to the closure of factories across the world earlier this year because of COVID-19, Northover warned.

“Whilst factories across the world have begun reopening, the supply pipeline will take time to replenish, the full impact of this will play out over the coming months," he said.

Across the horsepower categories, most ranges recorded a healthy increase in sales, except for the 200hp and above category.

The 100 to 200hp range led the way with a whopping increase of 60 per cent for May and 31 per cent YTD. Northover said the strength in the horticultural space is having a big impact on demand for this range, strongly supported by the financial incentives in place.

The under-40hp range recorded a 16 per cent increase for the month and now sits 5.6 per cent ahead for 2020.

The 40 to 100hp range was also up a strong 39 per cent, now nine per cent ahead for the year while the 200hp and above range dipped 13 per cent for the month and is now seven per cent behind year-to-date.

In regards to the other machinery categories, sales of combine harvesters have effectively stalled with very few sales completed in May and the outlook still subdued, Northover said.

“Whilst there continue to be encouraging signs of a return to grain planting activity, which will ultimately lead to harvesting, meaningful demand for new harvesters is still a fair way off,” he said.

Baler sales continued its upward streak - up 10 per cent year to date, while sales of out front mowers dipped but remain 16 per cent ahead of the same time last year.