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End of the road for used machinery exports?

With news that the pound is starting to weaken, what effect will this have on used machinery sales, and in particular the export market?



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Both new and used machinery sales have been hit hard in the last 12 months.

Unsurprisingly, the used machinery market has been in a fairly sad state. Low commodity prices coupled with a strong pound have conspired against machinery dealers to eat into both new and used sales.

 

However, there are early signs of a recovery according to Chris Wiltshire, John Deere’s marketing manager. “The exchange rate will always govern used export trade, and it only needs to move a couple of points to get things moving, something which our dealers are just starting to see again.”

 

“It is not unprecedented to have such a strong pound and still have new machinery sales continue to do well. The current problem, however, is this time it clashes with low farmgate prices, resulting in reduced spending right across the board.”

 

From a dealers perspective which relies upon the export market as an outlet for the majority of its used machinery, Graham Parker, Ernest Doe sales director says; “As the pound continues to fall, thankfully things are starting to get better. It has certainly been a difficult 12 months, but we did manage to brace ourselves for the worst to some extent by shifting stock early.

 

“Indicators that the used market was slowing down, mainly a build up of used stock, started to show themselves in the middle of 2014. A further indication came from our 2015 Doe Show in February where normally a lot of used stock is shifted. It was then we realised that measures had to be taken.”

 

Dispersal sales are showing quality used machinery is in demand.

When times are good, Mr Parker says Doe’s will export about 60-70 per cent of its used machinery. “The export market is very dependent on the strength on the pound. Increasingly however, changes in local government policy in the export markets affect peoples buying decisions. Particularly where subsidies are involved, farmers tend to go for newer machinery.”

 

Buoyed by a recent dispersal sale in Norfolk where many lots comfortably exceeded expectations, Brown and Co auctioneer, Chris Purllant says; “The current squeeze on farm incomes has meant increasing numbers of farmers are shunning even heavily discounted new machinery in favour of good quality used kit.

 

“Although we have seen a slight weakening in the sterling, exporters are still thin on the ground. Farmers have been very much to the fore at recent sales.”

 

Mr Wiltshire says the writing has been on the wall for a while for used machinery exports. “The traditional Eastern European countries which used to be strong markets for the UK’s used machinery are starting to develop their own dealer networks, building up their own stocks of used machinery, resulting in a reduced need to take machines from the UK.”

 

Conversely, Mr Parker adds; “Exporting machinery is a lot harder than it used to be, but there are new markets emerging. If the strength of the pound is right, there will be export opportunities for a long time to come.”

 

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