Germany's agricultural machinery industry is looking back to a turbulent business year 2016. While the downward trend of the past year has significantly slowed down, with a production turnover of EUR 7.2 billion, the industry still falls short of the growth zone. “A 2% decline is certainly no reason for euphoria, but certainly for cautious optimism, more so since producer prices, especially for milk, are clearly picking up”, says Dr. Bernd Scherer, Managing Director of VDMA Agricultural Machinery.
Growth in incoming orders provides a tailwind
The strong growth in incoming orders has been providing a boost to the industry since the fourth quarter of the past year. “In Germany, we recorded an increase of 7%. In other markets, especially outside the EU, there are also remarkable growth rates. Only France, the most important destination for German exports of agricultural machinery, needs to improve,” explains Dr. Scherer. With a share of 26%, the demand on the domestic market still plays a major role. However, sales on the German market in 2016 fell 9% short of the previous year’s level.
Eastern Europe makes its comeback
The agricultural machinery business went especially well in the Eastern European territorial states of Russia and Ukraine, which the industry considers the most important future markets with a high sales potential. “After years of insecurity, both markets are making an impressive comeback. In Russia, growth was 50%, in the Ukraine even 70%,” emphasizes the association's Managing Director.
Heterogeneous development of product segments
On the other hand, the development of the individual segments is rather heterogeneous. While tractor sales, with a drop of 3%, were only slightly weaker than the overall business, there was a much more steeper decline in the sales of harvesting machines, milking and transport equipment.
On the other hand, the year ended with a double-digit growth for manufacturers of drilling, sowing and crop protection equipment.
Consolidation course continues
In 2017, the VDMA expects a continuation of the current consolidation course, with a total production volume of EUR 7.1 billion at German agricultural machinery locations from Marktoberdorf to Buxtehude being a realistic estimate. “This means that we can assume a lateral movement at a solid level,” summarizes Dr. Scherer.