Smaller equipment dealers aren't feeling too confident about the future when it comes to sales in the construction industry. According to the results ofRural Lifestyle Dealer’sannual dealer survey, only about a third of dealers think sales will grow at least 2% this year. Another third think revenue will decline.
According to the publication, that breaks a string of 5 straight years in a row where at least half of dealers anticipated growth.
Reasons behind the pessimism include continued supply chain issues, inflation, the threat of a recession, and continued problems with COVID-19 in parts of the world.
The environment of uncertainty is causing stress on those who matter most, machine owners and contractors.
"Here at ConEquip Parts we do the best we can to meet expectations, parts demands, while being upfront with our customers about the challenges faced when it comes to getting parts out. Our approach is to be sure customers have the correct information, be proactive in making sure they have updates about parts orders," said ConEquip Parts President Al Alexander.
"We add a few days on estimated delivery times with the intention of hopefully exceeding expectations at the end of the transaction."
When it comes to the sale of entire machines, there are eight types dealers expect to see sales drop.
- Utility vehicles – 32%
- Tractors 40-100 hp – 30%
- Backhoes – 29%
- Tractors - 40 hp – 28%
- Compact excavators – 28%
- Lawn tractors – 27%
- Front-end loaders – 25%
- Finishing mowers – 25%
Another factor in the expectations of declining sales is the slow transition from diesel to electric powered machines. The new frontier has both dealers and customers in a bit of limbo. Dealers are attempting to balance supply and demand while customers are taking time to decide if electric is the direction they want to start going with their fleets.
Dealers say equipment shortages continue to cause the biggest challenges. Roughly 93% are most concerned while just 3% have no concern.
And then there's the challenge of finding good employees to move the inventory. According to the report, roughly 76% of dealers are most concerned about employee shortages while just 1% have no concern.
Most smaller dealers think relief will come from the aftermarket industry.
Roughly 60% of rural equipment dealers think aftermarket revenues will increase again this year. Only about 13% of dealers think aftermarket sales will decrease, while about a third believe it will remain about the same.
Smaller dealers also realize maintaining a reliable service department run by skilled technicians is important yet that's another area seeing a shortage of workers. In an effort to keep the ones they have and bring in new techs, many dealers must pay more than the average in wages for their area of the country.
Others offer increased benefits, tuition, and bonuses.
74% of dealers are planning to invest more in their service department operations in 2022. Roughly 60% plan to invest more to improve and modernize retail operations.