In Agri Crisis, Farmers and Tractor Dealers are Stuck In.

The industry experiences increased pressure on agricultural machinery sales and the need of the hour is to implement targeted strategies to manage dealer profitability, mitigate downside risks and address farmer concerns.

Inaccurate product specifications such as the actual horsepower of the tractor has put farmers at a high risk of machine damage due to misuse and then this adds to their repair and maintenance expenses. Poor servicing support from dealers also impairs efficiency levels, particularly during peak seasons.

According to the JD Power 2015 India Tractor Studies, less than half of tractor owners surveyed unanimously agreed that their dealers went out of their way to help them. If given a choice, close to 70% of respondents expressed a likelihood of using an independent workshop or local mechanic. Tractor dealers are also under constant pressure from original equipment manufacturers (OEMs) to meet monthly volume targets, expand business and are struggling to continuously reinvent themselves.

The dealer’s survival is no longer reliant only on sales of new equipment. Managing soaring customer expectations adds another layer of complexity. In order to assist cash-strapped farmers, they required to provide flexible financing options and need to facilitate trade-ins for aging farm equipment to help farmers pay for new machinery upgrades. The accumulation of used tractor stock across the network is forcing residuals and making it hard for dealers to make any profit from trade-ins.

According to the findings of JD Power study, farmers who took their tractor to the dealer workshop for servicing or repair are less satisfied than those who had their tractor attended to at their farm. Farmers are also cost-sensitive as satisfaction scores drop by more than a 100 index points when servicing fee was far more than expected. Customers expect repair and maintenance to be provided instantly and at a location that is convenient to them.

Service support-wise, dealers to provide complete services and parts solutions, and have a network of talented and experienced staff with access to inventory are the expectations of customers. Additionally, manufacturers can address the credit demands of customers by providing appropriate financing options. There are many ways in which OEMs can also aid dealers in managing their resources and improving profit margins, whether it is supporting the network with trade-ins for old machines or providing leasing options to customers who want to curtail costs.

Rethinking prevailing strategies by staying attuned to network demands will enable manufacturers win long-term commitment and loyalty from their dealers and also exploring opportunities of working with customers will drive change across the sector.

The sector that feeds over a billion holds immense potential over the medium- to long-term. This is echoed by the positive outlook of the tractor owners covered in the JD Power study.

Source: http://www.thehindubusinessline.com/