Top 10 influential events in the field of agricultural machinery circulation in 2024

By utilizing big data technology and integrating indicators such as event influence, social public opinion attention, importance to industry development, and recognition by industry experts, a weighted integral ranking is conducted to review and summarize various aspects of agricultural mechanization, resulting in the "2024 Agricultural Mechanization ◆ ◆ 10". With the intention of carrying forward the past and opening up the future, we hope readers can leave a message in the comment section to facilitate similar affairs. Today, we are launching a series of reports, Part 7: Top 10 Influential Events in the Agricultural Mechanization Circulation Field in 2024.

1. The intensification of competition and pattern adjustment in the agricultural machinery market

The intensification of competition in the agricultural machinery market in 2024 is the result of multiple factors working together. Firstly, in 2023, there will be a phase of adjustment in the agricultural machinery market, with a decline in actual sales of some National IV engines, such as large and medium-sized tractors, corn harvesters, rice harvesters, wheat harvesters, and most dealers failing to achieve their expected sales targets. The market demand is sluggish, and many enterprises are facing operational pressure, which will continue until 2024, making competition even more intense. Secondly, in 2024, with some tail enterprises' National IV products entering the market in bulk, the original market pattern will be further affected. In this situation, companies compete for market share by lowering prices and competing for sales, causing mutual harm. Because price is one of the most direct and effective means of market competition, companies hope to attract more customers and increase product sales by lowering prices.

The adjustment of this competitive landscape is also reflected in the transformation and exit of enterprises. Due to fierce market competition, some agricultural machinery enterprises and distributors are forced to transform or exit the market in the face of operational difficulties such as high costs, increased product inventory, and difficult capital turnover. For example, some dealers, due to the difficulty of continuing the traditional profit model based on scale, may experience losses and have to withdraw from the market when they encounter long-term product inventory backlog or delayed return of after-sales product funds. And the market space freed up by these enterprises is occupied by other competitive enterprises, further intensifying the competition among enterprises for the remaining market share.

From the perspective of the development trend of market competition, leading host companies and distribution enterprises have begun to focus on increasing their investment in the manufacturing and sales of mid to high end, large and medium-sized profitable products. This is because the demand for such products in the market is gradually increasing, and their profit margins are relatively large, which can help companies gain more profits in the fierce market competition. For those enterprises that cannot adapt to market changes and still rely on low-quality, low profit products, they will face greater survival pressure.

2. Transformation and Innovation of Marketing Models

In 2024, there has been a significant transformation in the marketing model of agricultural machinery circulation. The traditional sales model of agricultural machinery mainly relies on waiting for customers to come, which can meet the sales needs of enterprises in the past when market demand was relatively stable. However, with the intensification of market competition and changes in market demand, this passive sales model is no longer able to adapt to the new market situation.

In order to change this situation, many regional distribution channels have begun to upgrade their marketing models. On the one hand, actively carry out online promotion, advertising, and sales activities. Through the Internet platform, enterprises can spread product information more widely to potential customers, regardless of geographical and time constraints. For example, using social media, e-commerce platforms, etc. to showcase products, promote promotional activities, etc. Online sales can also reduce marketing costs for businesses and improve sales efficiency. On the other hand, offline product demonstrations and promotions should be strengthened, and potential customers should be sought in rural areas. The ultimate users of agricultural machinery products are mainly the vast rural population. Going deep into the countryside can directly reach the target customers and understand their actual needs. Through product demonstrations, farmers can have a more intuitive understanding of the product's performance and advantages, thereby increasing their willingness to purchase.

Strengthening customer management construction is also an important aspect of marketing model transformation. Enterprises are beginning to deepen their contacts and communication with opinion leaders and major clients, listen to their suggestions, and seek opportunities for cooperation. Opinion leaders often have a high influence in rural areas, and their recommendations and recognition can drive other farmers to purchase products. Key customers are an important support for enterprise sales. By establishing long-term and stable cooperative relationships with key customers, enterprises can ensure stable sales channels and revenue sources.

The transformation and innovation of this marketing model is an inevitable choice for enterprises to cope with market competition. By combining online and offline methods and strengthening customer management, enterprises can enhance their market competitiveness, expand their market share, and achieve better development in the fierce market competition.

3. Changes in Product Quality and Market Space

The upgrade of National IV products has had a profound impact on the field of agricultural machinery circulation. National IV products have comprehensively improved product quality, which has led to significant improvements in reliability, durability, and performance. After the launch of the National IV product, the problems of low-quality products of individual enterprises gradually emerged, such as gear box tooth punching, hydraulic pipeline interface oil leakage, poor consistency, etc. These problems have led to a high failure rate of products in agricultural operations.

Due to the influence of user word-of-mouth communication, the reputation of low-quality products gradually deteriorates, and potential users are changing their brand choices one after another. For distributors, the first consideration when purchasing is product quality. Although low-quality products are cheap, their overall operational efficiency is low due to various factors such as product failures and overall performance. Especially during busy farming seasons, low efficiency may cause significant economic losses to farmers, far less than the operating income brought by high-quality products. Therefore, the market space for low-quality products is becoming smaller and smaller, while the sales of high-quality products are steadily increasing.

The changing trend of product quality and market space reflects the increasing importance that the market places on product quality. With the development of agricultural mechanization, farmers have increasingly high quality requirements for agricultural machinery products, and they are more willing to purchase products with reliable quality and excellent performance. This also prompts enterprises to continuously improve product quality, strengthen product research and development, and production management to meet market demand. For circulation enterprises, it is necessary to pay more attention to the screening and control of product quality, choose to cooperate with high-quality product manufacturers, and thus improve their market competitiveness.

4. The profit model faces challenges and transformation

In the field of agricultural machinery circulation, the traditional profit model is facing enormous challenges. According to information from industry symposiums, several top ranked distributors in different regions of China have stated that the average gross profit margin for agricultural machinery product distribution is around 10%. After deducting various expenses, the net profit margin is only between 2-3%. Moreover, some companies have overly detailed traditional channels and densely planted terminal channels, making it difficult for distributors to continue their traditional profit model based on scale.

In this situation, dealers have taken a series of measures to increase profits. For example, choosing to exit brands that are experiencing losses and have no hope of turning them around in the short term, in order to avoid investing resources in these brands and causing greater losses. Setting purchase thresholds for products that cannot generate profits and are prone to backlog reduces the need for advance payments and credit sales, and strictly controls multiple cost expenditures. Through these measures, dealers can optimize product structure, reduce inventory risks, improve capital utilization efficiency, and strive to increase operating profits.

Meanwhile, some dealers are also exploring new profit models. For example, collaborating with enterprises to improve profitability through sharing resources, reducing costs, and other means. Some relatively strong dealers actively train and cultivate the quality of team members, strengthen team management, standardize process systems, and enhance team competitiveness. By improving the professional level and work efficiency of the team, better services can be provided to customers, thereby increasing customer satisfaction and loyalty, and bringing more business and profits to the enterprise.

The transformation of this profit model is an inevitable requirement for enterprises in the field of agricultural machinery circulation to adapt to market changes. In the fiercely competitive market with limited profit margins, enterprises can only survive and develop in the market by constantly innovating and improving their profit models.

5. After sales service faces higher challenges

In 2024, with the increase of National IV Machinery, the after-sales service of agricultural machinery is facing higher challenges. In the spring and autumn season of 2023, farmland operations were mainly carried out by National Third Machinery, with only some National Fourth Machinery participating in the operation. However, at that time, the serious problem of tight service resources for agricultural machinery enterprises and distributors had already been exposed.

The main problem among them is the insufficient maintenance skills of after-sales personnel, which cannot meet the demands of frontline service. In the context of increasing service demand, some companies even have workshop assembly personnel transferred to the front line of service, but still cannot solve the problem well. Service response, service accessories, and other aspects cannot meet the requirements of agility and timeliness, with low speed and efficiency, and cannot achieve customer satisfaction.

To address these challenges, manufacturers need to collaborate to increase the training of service personnel and improve on-site after-sales service skills. For example, service personnel can be familiarized with the technical characteristics and maintenance methods of National IV Machinery through training courses, technical exchange activities, and other means. At the same time, it is necessary to reserve sufficient proprietary and ordinary service parts to ensure that they can meet the needs of on-site service maintenance. Establish a comprehensive accessory supply system to ensure timely supply of accessories. In addition, it is necessary to strengthen the service response mechanism by establishing customer service hotlines, online service platforms, and other means to promptly grasp user service demands and handle service issues.

After sales service is an important link in the field of agricultural machinery circulation. Good after-sales service can improve user satisfaction and enhance the market competitiveness of enterprises. Therefore, enterprises must attach importance to the challenges faced by after-sales service and take effective measures to cope with them.

6. The 2024 China International Agricultural Machinery Exhibition will be held in Changsha

The 2024 China International Agricultural Machinery Exhibition will be held in Changsha, Hunan from October 26-28, 2024. This is the largest agricultural machinery exhibition in Asia and one of the top five in the world, which is of great significance to the field of agricultural machinery circulation.

Firstly, the exhibition provides a platform for agricultural machinery enterprises to showcase their products and technologies. Many domestic and foreign agricultural machinery production enterprises gather here, with over 2000 exhibiting companies. Enterprises showcase their new products and technologies through exhibitions to enhance brand awareness and influence. For example, a certain enterprise showcases its latest agricultural machinery products, such as new tractors and harvesters, as well as the application of new technologies such as intelligence, energy conservation, and environmental protection in agricultural machinery products.

Secondly, exhibitions can help promote the cooperation of industry, academia, research and application throughout the entire chain of the agricultural machinery industry. The development of agricultural machinery requires cooperation from all parties, including research institutions, production enterprises, distributors, users, etc. At the exhibition, all parties engage in face-to-face communication and cooperation to jointly promote the high-quality development of the agricultural machinery and equipment industry. For example, scientific research institutions collaborate with enterprises to transform research results into practical products; Distributors negotiate cooperation with manufacturing enterprises to expand sales channels.

Furthermore, the exhibition has promoted the entry of high-quality resources from the whole society into the field of agricultural machinery and equipment. Through the promotion and advertising role of exhibitions, attract more investors, technical talents, and others to pay attention to the agricultural machinery industry, injecting new vitality into its development. For example, some investors discover the development potential of the agricultural machinery industry through exhibitions, thereby increasing their investment in agricultural machinery enterprises; Technical talents are attracted by the innovative development of the agricultural machinery industry and join agricultural machinery enterprises.

Finally, a series of related conferences were held at the exhibition, such as the China Smart Agriculture Conference, the China Pasture Conference, etc., as well as national conferences organized by agricultural and rural departments around major national strategies, cutting-edge agricultural technologies, and high-quality development of agricultural mechanization. Academicians, experts, and scholars related to agricultural machinery were also organized to hold forums and discussions. These conferences and seminars will provide policy guidance, technical support, and development ideas for the development of agricultural machinery circulation.

7. The development trend of agricultural machinery circulation industry is quietly changing

With the acceleration of agricultural modernization, the development trend of the agricultural machinery circulation industry is also undergoing changes. The circulation of agricultural machinery covers the sales, leasing, maintenance, and recycling of agricultural machinery. In recent years, with the government's policy support for agricultural mechanization and intelligence, the network of agricultural machinery circulation has been continuously expanded, and service models have been constantly innovated.

On the one hand, digitization and platformization have become important directions for future development. By establishing a nationwide agricultural machinery big data platform, it is possible to optimize the allocation of agricultural machinery resources and match supply and demand. For example, using big data platforms can understand the demand for agricultural machinery in different regions, so as to allocate agricultural machinery resources reasonably, improve the efficiency and intelligence level of agricultural production. At the same time, with the application of agricultural IoT technology, remote monitoring and predictive maintenance of agricultural machinery circulation can be achieved. Enterprises use IoT technology to monitor the operational status of agricultural machinery in real-time, detect potential faults in advance, and perform maintenance to reduce downtime and improve the availability and reliability of agricultural machinery.

On the other hand, environmental protection and circular economy have received more attention in the field of agricultural machinery circulation. Promoting the recycling and green maintenance of agricultural machinery has become a development trend. For example, recycling and dismantling waste agricultural machinery, refurbishing and reusing reusable parts, can not only reduce enterprise costs, but also reduce resource waste and environmental pollution. Meanwhile, the application of green maintenance technology can reduce pollution emissions during the maintenance process and achieve sustainable development of agricultural machinery maintenance.

The shift in this development trend reflects the active exploration of the agricultural machinery circulation industry in adapting to the requirements of modern agricultural development. Enterprises need to adapt to this trend, strengthen digital construction, focus on environmental protection and circular economy development, in order to enhance their competitiveness and sustainable development capabilities.

8. Opportunities and challenges in the second-hand agricultural machinery circulation market

The circulation of second-hand agricultural machinery and equipment is both an opportunity and a challenge in the field of agricultural machinery circulation in 2024. With the domestic agricultural machinery supply and demand relationship transitioning from "shortage" to "surplus", the second-hand agricultural machinery market is gradually emerging.

From the perspective of opportunities, if the second-hand agricultural machinery circulation market is sound and unobstructed, it will be able to promote the sales of new machines. For some farmers or small-scale agricultural operators with limited funds, second-hand agricultural machinery is an economical choice. Purchasing second-hand agricultural machinery can reduce their initial investment costs while also meeting their basic agricultural production needs. Moreover, the development of the second-hand agricultural machinery market can inject new vitality into the entire agricultural machinery circulation market and expand market space.

However, the second-hand agricultural machinery circulation market also faces many challenges. Firstly, the quality of second-hand agricultural machinery varies greatly, lacking unified quality standards and testing methods. This leads to significant risks for consumers when purchasing second-hand agricultural machinery, as they are concerned about purchasing equipment with quality issues. Secondly, the after-sales service for second-hand agricultural machinery is relatively weak. Due to the complex sources of second-hand agricultural machinery, many devices have already exceeded their warranty period, and the responsibility for after-sales service is difficult to define, which makes it difficult for consumers to obtain timely and effective solutions when encountering problems during use.

In order to promote the healthy development of the second-hand agricultural machinery circulation market, it is necessary to establish and improve relevant laws, regulations, and market supervision mechanisms, formulate unified quality standards and testing specifications, strengthen the construction of after-sales service system, and thus enhance consumers' confidence in the second-hand agricultural machinery market.

9. The sustained impact of agricultural machinery purchase subsidy policy

The agricultural machinery purchase subsidy policy will continue to have an impact on the agricultural machinery circulation sector in 2024. In the past, the subsidy policy for purchasing agricultural machinery has played an important role in promoting the development of the agricultural machinery market. For example, before 2023, the subsidy policy stimulated the sales of agricultural machinery and increased the comprehensive mechanization rate of crop cultivation and harvesting, from 34% in 2004 to 73% in 2022. The mechanization rate in the northern plains exceeded 80%, but it is still less than 50% in the southern hilly areas, indicating that the agricultural machinery market still has great development space under the subsidy policy.

In 2024, although some regions will further reduce subsidies for certain products of the National IV Project, subsidy policies will still be one of the important factors affecting agricultural machinery sales. On the one hand, subsidy policies can reduce the cost of farmers purchasing agricultural machinery and increase their purchasing enthusiasm. Even if the subsidy amount is reduced, it can still save farmers a certain amount of money. For some higher priced agricultural machinery products, the subsidized price is more attractive. On the other hand, subsidy policies can also affect a company's product layout and market strategy. Enterprises will increase their investment in research and production of products within the subsidy scope in accordance with the guidance of subsidy policies, in order to gain more market share.

However, subsidy policies also bring some problems. For example, it has led to some companies overly relying on subsidies and neglecting product quality and innovation. Stimulated by subsidy policies, some enterprises lower their requirements for product quality in order to obtain more subsidies, thereby affecting the healthy development of the market. In addition, adjustments to subsidy policies may also bring certain fluctuations to the market, such as a decrease in subsidy amounts that may affect the sales volume of some products.

10. Development Differences and Potential of Regional Markets

There are development differences and potentials in the field of agricultural machinery circulation in different regional markets. For example, in the Northeast region, as an important agricultural production area in China, there is a high demand for agricultural machinery, especially for agricultural machinery products that can adapt to cold climates and large-scale farmland operations. Moreover, the level of agricultural mechanization development in Northeast China is relatively high, with relatively complete construction of agricultural machinery circulation network and after-sales service system, which provides a good foundation for the development of agricultural machinery enterprises in the region.

However, in the hilly areas of the south, due to the complex terrain and scattered arable land, the adaptability requirements for agricultural machinery are higher. Currently, the mechanization rate is still less than 50%, which is significantly lower than that in the plain areas of the north. This also means that the agricultural machinery market in the southern hilly areas has enormous potential. For agricultural machinery enterprises, it is necessary to develop and promote small, flexible, and multifunctional agricultural machinery products suitable for use in southern hilly areas, while strengthening the construction of circulation networks and after-sales service guarantees in the region, in order to explore the agricultural machinery market in southern hilly areas.

In North China, the agricultural production structure is diverse, and there is a demand for various types of agricultural machinery products. The competition in the agricultural machinery market in this region is also fierce, and enterprises need to continuously improve their product competitiveness and service level in order to occupy a place in the agricultural machinery market in North China. The development differences and potential of different regional markets require agricultural machinery enterprises to fully consider the actual situation in each region when market layout, and formulate targeted market strategies to achieve sustainable development of enterprises in different regional markets.

Author: Hanzhong Woodcutter

Source: Agricultural Machinery News Network