New farm equipment sales are projected to be softer into 2024, as higher interest rates, elevated equipment prices and a decline in commodity prices impact purchasing decisions. However, the farm equipment fleet is showing signs of aging. This is a trend to monitor in 2024 and beyond as dealers may see increased demand for service and parts.
New farm equipment sale projections
New farm equipment unit sales are projected to record mixed performance for the remainder of 2023 and 2024 (Table 1). Strong sales in 2023 reflect the resolution of supply chain issues and record-high crop receipts in 2022 and the first half of 2023. 100+ horsepower and lower tractors are expected to have unit sales decline in 2024 as purchasing decisions reflect a more cautious environment due to challenges in the livestock sector due to the drought in western Canada and tighter revenues for hog and dairy sectors in eastern Canada. The slowing Canadian economy will also reduce demand for lower horsepower tractors. Canadian implement manufacturing dollar sales are expected to finish higher in 2023 due to price inflation on raw materials used in manufacturing. Both 4WD tractors and implement manufacturers (e.g., air drills) faced delivery issues and low inventory levels throughout 2023, which are driving part of the increase in our 2024 projections.
Equipment inventory levels have improved – 4WD tractors remain low
Inventory levels of new equipment rebounded in 2023 and are now in line with the 5-year average for most categories as sales slowed and manufacturers caught up on deliveries. However, 4WD tractor inventories are expected to remain low (Figure 1).
As new equipment sales slow, inventory levels will continue to increase, returning closer to pre-pandemic levels as manufacturers build new units. Manufacturers are unlikely to adjust production levels in the short term. Rising inventory levels of new equipment will spill over to the used equipment market.
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