Year-to-date figures to the end of April showed 1104 sales across all horsepower categories compared to 1111 in 2018, a drop of 0.6%.
North Island sales fell by 4.7% but South Island sales increased by 7.4%.
April national sales figures were down 11.7% compared to April 2018, which was partly because of a reduction in the smaller models 20hp to 50hp, which are used by small commercial operations and lifestyle block owners.
“When business confidence in the cities is flat as it is currently we expect to see a reduction in purchases of smaller horsepower models as fewer people choose to commit.”
Overall confidence in the rural sector is strong and farmers are buying machinery, however, there have been a few developments that might affect future sales, Tulloch says.
The first is the tightening of credit conditions.
The Reserve Bank has signalled a requirement to increase the equity-to-loan ratio. That will affect the indebted rural sector, in particular dairy farmers, who typically carry more debt.
Another change is the increase in shipping costs because of new emissions regulations taking effect. By January most ships will be subjected to restrictions on sulphur emissions.
“Basically, ships that previously used crude oil have to switch to a lower sulphur oil-based fuel such as diesel, pushing up shipping costs for tractor and machinery importers. This would then be passed onto consumers,” Tulloch said.
The third challenge facing the sector is the increase in the minimum wage.
“Many people working in our sector actually receive more than the minimum wage but there will be a flow-on effect.
“If the lower end of the wage scale increases then all wages need to be reviewed and this causes wage inflation.
“Four or five years ago a service technician received about $28 an hour. Now that’s up to $35. But despite the wage increases, we still have problems with a lack of qualified staff,” Tulloch said.
