Trendlines: Tractor sales still falling

30 May 2024

It already looks certain that 2024 will be a third consecutive year of falling ag tractor sales

As with most equipment types, the agricultural tractor market saw a remarkable spike in demand during the pandemic. Sales in the U.S. and Canada hit almost 380,000 units in 2021, according to statistics from the Association of Equipment Manufacturers (AEM), compared to levels of around 210,000 to 295,000 tractor sales per year that had been seen throughout the 2010s.

Quarterly Tractor Sales - U.S. and Canada (units) Source: Association of Equipment Manufacturers

But this is where demand for tractors and that of other equipment types go their separate ways. In the construction equipment segment, further sales records were set in 2022 and 2023. However, agricultural tractor sales fell some 15% in 2022 and slipped another 6% in 2023. Granted, this brought the market back down to what might be considered a more natural level in 2023 after the exceptional demand of the pandemic years, but it was still at odds with other heavy equipment trends.

High costs, low prices

More striking (and therefore more worrying) is the trend for the first quarter of 2024. New data from the AEM’s monthly flash reports on tractor retails show the market fell almost 14% in the first quarter of the year compared to the same period in 2023.

The root cause of this decline is not hard to spot. Farmers are being hit with a combination of persistently high production costs and falling crop prices, which means that farm incomes are falling very steeply. The February forecast from the U.S. Department of Agriculture (USDA) said inflation-adjusted farm incomes would be down 27% in 2024 compared to 2023.

The area that has been hit hardest is the compact tractor (less than 40 hp) segment, which was down nearly 20% in the first quarter compared to the same period last year. In volume terms, this has a big impact because even with the decline in sales, compact machines accounted for 60% of the total ag tractor market in the first quarter.

On the positive side, the decline was much more limited for 40- to 100-hp two-wheel-drive and all-wheel-drive tractors, while the 100-hp and above two-wheel-drive segment enjoyed a modest rise in the first quarter.

Chris Sleight, managing director, Off-Highway Research.

Echoes of 2023

It remains to be seen how the year pans out and it would be premature to panic. The first quarter of 2023 saw a similar year-on-year downturn at 13.1%, but the fall for the year as a whole was limited to 6.2%. Another feature of 2023 that has echoes today is that the higher horsepower and all-wheel-drive segments performed well last year.

The second and third quarters are the most important for tractor sales, so the shape of this year’s market will be defined over the next few months. However, it looks likely that tractor sales will fall for a third year in a row in 2024. It will be hard to turn around the weak first quarter, particularly with economic uncertainty brewing ahead of the November elections.

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