Over the past twelve to eighteen months, Service Dealer Ireland has been reporting on the downturn of tractor sales in Ireland and in Europe. Only last month the Farm Tractor and Machinery Trade Association (FTMTA) reported that registrations of new tractors were 23% lower in May 2024 compared to May 2023. That is a significant drop by anyone’s standard.
However, there are signs of better times ahead. The Irish business climate appears to be in a much favourable position now than it has been for several years. On the 6th of June last the European Central Bank (ECB) lowered its interest rates by 0.25%, bringing rates from 4% to 3.75%. This is the first time they have done so since September 2019. The ECB is expected to make another rate cut before the end of the year. Some optimists even predict two interest rate cuts by year end, but we will have to wait and see if that happens.
Having lower interest rates is good for business. It makes it a bit easier to repay loans. Some dealers may be considering expanding their premises or even moving to a bigger site. Capital investment requires a lot of money. The ability to pay back a loan looks to be much better now than it was a year ago. However, convincing your bank manager to give you a loan may be another day’s work. The banks got bitten hard during the financial crash in 2008 when they readily gave out loans. They haven’t forgotten that lesson.
Lower interest rates not only affect our business loans. The ability to repay loans will also favour some of our customers. Given that interest rates are heading in the right direction, sports facilities, such as golf and football clubs, may be tempted to invest in new machinery. Farmers and growers may also be enticed to purchase new tractors. If that happens it should reverse the familiar downturn in tractor sales to more positive figures.
Another indication of favourable business conditions ahead is that inflation is starting to drop. This is good news for both customer and business owner. For businesses, lower inflation should ease the pressure on wage demands. As for our customers, their purchasing power will be much stronger in a low inflationary environment. That should bode well for the dealer network, especially those selling into the domestic market.
Energy prices are also falling, which means that the cost of running your dealership will be a lot less than it was this time last year. Unless another invasion or war starts, energy costs should remain stable leading into the winter.
Maybe now is the time to put more effort into your advertising and branding? It is important to get your name out into the marketplace. With lower interest rates, energy costs and inflation, people will have more disposable income.
In conclusion may I remind you that the GLAS trade exhibition takes place on Thursday 18th July at the National Basketball Arena. If you want to attend, then you must pre-register by visiting www.glasireland.ie Should you need more information you can call Eamonn Maguire on 087 1235167. GLAS is continuing its expansion into the sports surfaces and grounds maintenance sector. Part of this year’s exhibition will feature an outdoor machinery area that will include demonstrations.
