The market of agricultural tractors in Spain closed 2017 with a rise of 6.1%, standing at 46,641 units and exceeding, in terms of power, the barrier of 4 million HP. The data analysis provided in this report is based on figures from the Official Register of Agricultural Machinery (Rome).
Disaggregating these data by markets substitute we note that there have been just changes in the shares of these markets compared with the previous year; the used tractors represent 67% of the total market, the new 27%, the used import 3%, which comes from the sector of works and/or services to a 1%, and that the ROME included in the catch-all called “other reasons”, a 3%.
Indeed, there have been no changes at the global level in these markets, but, as we will see throughout this analysis, there are aspects that are directing the tractor market and that are not usually given the prominence they deserve.
In Spain, 1.5 million HP was added to the agricultural sector thanks to new and used imported tractors, with an average power of 108.9 HP and 145.5 HP respectively. The power of new tractors has decreased compared to 2016, as the number of vehicles approved as tractors (quads, Multi-Purpose Vehicles) has increased, with an average power of 30 HP. However, used imported tractors increase their average Power year after year at a rate of 3-4 HP per year.
Tractors that were already in Spain but have changed users during 2017 have an average power of 80 hp, and it is a value that does not vary ostensibly year after year. In fact, when comparing the average powers, we can assimilate the markets of “change of title” and “other motives”, since these values are practically the same. Having made this approach, and adding the units that come from the construction sector, we have that the tractors that were already in Spain account for 70% of the market (units previously marketed) and those that arrive in Spain, either from factories or from agricultural holdings in other countries, 30% (units added to the market).
Of the 12,530 new tractors registered in 2017, which represent an 8.9% increase over 2016, 11,981 units correspond to agricultural tractors (standard, narrow and chain), and the remaining 549 units are other types of vehicles that regulation 167/2013 considers to be tractors with regard to the approval procedure; these are quads, multi-purpose vehicles (also called ATU or Side-by-Side) and certain types of telescopic handlers.
For several years the growth of the market of narrow tractors has been consolidated, so that in March 2017 the number of registered narrow tractors exceeded that of standard tractors for the first time in the history of Rome; and as already happened in 2016, the market volumes of these tractors have been the cause of the growth of the market of tractors. The 21% increase recorded by narrow tractors camouflaged the 2% drop experienced by Standard tractors in 2017 (accumulated at the 3.6% fall of the previous year compared to 2015). On the other hand, the chain tractors, which have been losing market in the last decade, have stabilized around 100 units (109 in 2017, with a growth of 11.2%).
The upward trend in narrow tractors has its origin in two completely different factors. The simplest to observe is the purely commercial one: there are certain models of standard tractors that have been marketed as straits for several years. And this fact is easy to corroborate with DGT statistics, as 516 narrow tractors with two seats appear. This would already mean a 10% reduction in the volume of registered narrow tractors, and the percentages of variation in Rome would be 10% for straits and 6% for standard ones.
But, as we will see below, these percentages are not realistic either, as in the last days of 2017 we have experienced a pioneering situation at European level —the entry into force of the new European type— approval-which has forced the registration of absolutely all tractors that were placed on the market, and thus altered the volumes of tractors registered in such a way that they do not correspond to actual demand.
And how is the actual demand for tractors calculated? In this way, it will basically analyse the behaviour of the different components of agricultural income, and the evolution of substitute markets.
The first estimate of agricultural income published by the MAPAMA shows a growth of the agricultural income of 4.9%, but the vegetable production has fallen by 1.4%, while animal production increased by 8,8%. With a first reading of the data we might think that having dropped the value of plant production then the tractor market should have fallen as well, but since the demand for machinery is not argued for data from a given year but for the accumulated of several years, the rise in the tractor market is related to the increases in plant production from 2013-2016, and the fall suffered in 2017 will have effects on the 2018 market.
That said, we return to the second factor that is causing the rise in the market for narrow tractors, and this is obviously income and substitute markets. If extensive crops are combined with standard tractors and special crops with narrow tractors, we see that:
The value of production of field crops is losing share of the production plant in front of the special crops, since the extensive are highly affected by the volatility of prices and the drought, and so in recent years, special crops accumulate annual increases of income, while the extensive suffer important variations in the levels of income (see, for example, the 22% fall in the value of cereal production in 2017). Standard tractors are losing market compared to used imported tractors, which as we saw before have an average power of 145 hp and are practically all standard tractors. The volume of these tractors has doubled in the last three years, and although its growth has stopped in 2017 (+1.4%), 1,572 tractors from other member states replace an important part of the market of new tractors.
These two factors can be seen in Table 1, since the AA CCS in which extensive crops predominate are those with the largest volumes of standard tractors, and show declines in these markets while at the same time being the regions in which used imported tractors are most abundant. It is interesting to see how in Castilla y León the effects of the drought have been so devastating that they have caused falls in both markets.
The used tractor group includes both those derived from the change of ownership, those from the construction sector and those from other reasons. They are the tractors that were already incorporated in agriculture but that have been part of the replacement market of the new tractors in 2017. With 31,825 registered tractors, this market has grown by 5% due to the increase of 5.8% of the standard tractors, that triple in volume to the narrow tractors.
Until 2016 there were four main regional markets: Andalusia, Castilla La Mancha, Castilla y León, and Galicia. These four CC AA already absorbed 60% of the used tractors of Spain, and in 2017 they have taken the leadership Andalusia and Galicia, with growth of 22% and 13%, respectively.
Although in 2017, Andalusia has taken the lead and has been placed as the main market for used tractors (5,464 tractors), its ratio of used tractors to new ones is not as high as in other CC AA with high volumes of used (for example, Galicia, where 5.2 tractors used for each new one are sold).
First effects of the new european approval
Compliance with European legislation is always a challenge for manufacturers, and has had a direct effect on the cost of tractors. According to the data of the ROMA, the average price, excluding tax, of an agricultural tractor in the year 2000 was approximately 26.700 euros, and by 2017 it has been approximately 49,000 euros, that is to say, the average price has increased by 83.5 per cent in the period 2000-2017. However, the average price per CV has increased from EUR 315 to EUR 450, or 42.6%.
The average cost of the tractor and the cost per CV have evolved in parallel until the arrival of the emission phases (IIIA and IIIB in 2006), at which point the average cost went its own way until those 40 percentage points were separated from the cost per CV (see Figure 4). These price developments corroborate the high cost of compliance with European legislation.