I just read the post "What Consultants Say About Shortline-Only Farm Equipment Dealerships" concerning the establishment of shortline-only dealers and it brought to mind the surveys that Farm Equipment Manufacturers Assn. (FEMA) conducted during the early 2000s.
There were two surveys conducted in association with the North American Equipment Dealers Assn. and the first one received 1,451 replies.
More than half of the dealers who responded indicated that they would consider being a shortline-only dealership (19.6% Yes and 33.6% Maybe). This survey also indicated that shortline products brought the highest gross margin within the wholegoods department. 34.2% of the respondents indicated that their shortline products produced more than 15% gross margin. That figure was not higher because that was the highest range on the survey. One dealer told me that he could generate as much profit from the sale of a fifteen foot rotary cutter as he could from a $60,000 tractor sale. He indicated that he could produce about a 20% gross margin on the cutter and would normally produce about a 5% margin on the tractor sale.
Success in Shortline Machinery is a feature in E-Watch, our bi-weekly e-newsletter. It is brought to you by Versatile.
Versatile, celebrating 50 years of 4WD production, is a full-line equipment manufacturer known for building products that are simple, reliable and easy to service and maintain. Versatile is seeking independent-minded dealers capable of selling and servicing equipment for large scale farming operations. If you want to add more horsepower to your bottom line, contact Alan Graff at agraff@versatile-ag.com or (920) 819-9039.
The two dominant reasons for establishing a shortline dealership, according to the survey, was Net Profit (82.1%) and Reduced Overhead Cost (33.1%).
There were many discussions in the Dealer Relations Committee at FEMA meeting concerning the possibility of increasing the number of shortline only dealers and there was a panel discussion that included five dealers who had no major line at one of the FEMA meetings. Three of these dealers had been a major OEM dealer prior to becoming a shortline only dealer and their consensus included:
- Control of overhead costs.
- Having an active sales effort with their current and prospective customers.
- Maintaining an excellent parts department and service department for the products they represented and for products they had sold previously.
Several successful shortline dealers were repair facilities for not only their shortline products but for tractor and combine repair. Like their long line dealer neighbors, their parts department and service department were profit generators and contributed to their overall success as a dealer.
Success in Shortline Machinery is a regular feature in E-Watch, our bi-weekly e-newsletter. It is brought to you by Versatile.
Versatile, celebrating 50 years of 4WD production, is a full-line equipment manufacturer known for building products that are simple, reliable and easy to service and maintain. Versatile is seeking independent-minded dealers capable of selling and servicing equipment for large scale farming operations. If you want to add more horsepower to your bottom line, contact Alan Graff at agraff@versatile-ag.com or (920) 819-9039.
