Whether you are running a retail dress shop, bakery or a Best Buy, managing your inventory is critical to achieving financial success. Having adequate working capital provides flexibility and prevents having all of financial freedom ties up in inventory.
These financial realities are very true for machinery dealers as the carrying costs of the inventory is in the millions. For two years, the Association of Equipment Manufacturers and the Equipment Dealers Association have surveyed its members in regards to their position on inventories. The result are very interesting.
According the Association of Equipment Manufacturers blog:
EDA’s dealership survey revealed that currently 43% of their dealers feel that their new equipment inventory is too high, 43% say it is just right and 14% feel it is too low. This is an improved perspective from 2016, where 62% thought that new equipment inventories were too high, and only 30% felt it was just right.
Dealers have a better perception of used equipment inventories this year as well. The percentage of dealers indicating that used equipment inventory is just right increased to 36% from 30% in 2016, and the number of dealers that feel used equipment inventory is too high dropped to 48% versus 59% last year. It therefore goes to reason that more dealers feel that used equipment inventory is too low, with 16% this year compared to 11% in 2016.
I think a really good indication that dealers are having a better year is the difference between the “too high” 2016 finding of 62% which fell to 43% in 2017.
Another interesting data point in the survey is that while 43% of dealers feel their new inventory is too high, only 6% of equipment manufacturers agree. Clearly manufacturers think that dealers could take on more of the manufacturers pieces which is somewhat self serving in intentions.
Since the survey is only two years old there is no indication of what the opinion breakdown would be in a $6.00 / bu corn market when equipment sakes would be very strong.