Machinery downturn continues

Tractor and Machinery Association February sales report

Machinery
MACHINERY MATTERS: Tractor and Machinery Association executive director Gary Northover

MACHINERY MATTERS: Tractor and Machinery Association executive director Gary Northover

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The Tractor and Machinery Association February sales report shows continued downturn.

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The machinery industry continued its downturn in February, though some hope is on the horizon following more widespread rain.

Tractor and Machinery Association executive director Gary Northover said tractor sales in February failed to meet last year's depressed level, falling short by 2 per cent.

"Whilst there was some very welcome, widespread rainfall throughout February, it will take some time to translate to improved sales," he said.

"Judging by the level of optimism being seen in the market, an overall improvement is hoped for."

However, Mr Northover said more widespread market forces could be a barrier to recovery.

"The Australian stock exchange has suffered its biggest one day fall since the global financial crisis and the longer term impact of the corona virus pandemic remains unclear," he said.

Mr Northover said as the corona virus is having a severe impact on China's food service and on-trade channels and cited Rabobank commentary that the outcomes could become more serious and longer-lasting should the virus continue to spread.

"While the report said a quick and effective containment of the virus could lead to a rapid bounce-back, the longer the virus is uncontained beyond March, the more extensive, sustained and structural the impact will be on the food and agribusiness supply chain," he said.

Mr Northover said Victoria and Tasmania bucked the national trend, with a lift in sales of 13 and 6 per cent up in sales respectively.

"Activity in the northern states remains subdued with NSW down 6pc on last February and Queensland down 11pc.

"The story in the West is somewhat downbeat with Western Australia 7pc down for the month.

"South Australia is down a further 6pc."

Mr Northover said the strongest sales continued to be in the 75 to 150 kilowatt (100 to 200 horsepower) category.

The 150kw (200hp) and above range was down 6pc for the month, while the 30 to 75kW (40 to 100hp was down 9pc.

Mr Northover said the below 30kw (40hp) range again struggled, down 5pc.

"It's this smaller 'leisure' market that we expect to struggle a little over the coming months," he said.

"Traditionally, this market has been sensitive to the general well being of the economy and with recessionary conditions imminent, demand could suffer."

Mr Northover said conditions for harvester sales continued to be challenging.

"As previously stated, the forward orders position is not great so most business will be completed from existing stock, of which there appears to be plenty," he said.

"Baler sales have taken a bit of a dip again in February and are now down 36pc on last year.

"Expectations remain high though for a very strong year once again."

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