Re: Why I avoid Mother Deere

Posted by JDseller on July 27, 2012 at 23:11:04 from (208.126.196.144):

In Reply to: Re: Why I avoid Mother Deere posted by NCWayne on July 27, 2012 at 08:24:37:

NCWayne you are talking about stuff you actually know very little about.

Yes there are recommended stacking levels on JD parts but it is up to each dealer to decide what he wants to keep. He does have to keep a percentage of his new equipment sales amount in parts. JD DOES NOT tell him what parts he has to keep just how many dollars is a minimum. Most dealers have no trouble keeping way more than that in parts inventory.

The different equipment is under different contracts. You DO NOT pay a royalty for each contract at JD. I did the JD settlements at the last store I worked at. I saw every dollar that was paid to JD from that store. There never was any kind of royalty paid for any of the different contracts. There are requirements to keep the contracts. Like selling a certain market share in your sales area and having a certain dollar amount in cash reserves. Also you have to have trained service, sales ,and parts staff with JD certifications to keep your contracts.

As for the need for the different contracts. I support them being different. You don't think about what is cost in man power and parts inventory to service each contract. There are only 2-3 sprayer dealers in each state. The parts inventory requirement is over 500K just for that line of equipment. Then the guys that service them have to have completely different training than the normal tractor guys for the stuff other than the engines. Work site products (skid steers) are the same way. The numbers are not as big but not every dealer has the parts and people to have the contract.

Let me tell you what caused the different contracts to come about. Up until about 1975 there where no different contracts. You could sell anything JD made. They first split out the industrial stuff when they started to get more serious in that business. When it was just a few models of back hoes and maybe two crawlers then they did not need different dealers. Things changes and they needed to have more specialized dealerships.

Then they also had the problem of having too many dealerships. Back when the two bangers where new, there where a lot more farms than there are today. So they needed more dealerships back then.

There was a dealer close to us in the mid 1980s that was an old dealer that had never sold much stuff. 4-5 tractors each year and maybe a baler or two that was it. He did very little repair work either. Kept almost zero parts too. The old man died and his son took over. The son would sell you anything for $500 over dealer cost. If it was something smaller that you wanted to put together yourself then he would go even cheaper. They could not even put together a six row corn planter because they could not get it out their shop door. He started selling forty to fifty tractors each year. He tried to sell combines but the territory manager would not let him order them. They could not have set one up at the time. So for about ten years he drove the profit out of the whole area for new equipment sales. He also never kept anything in stock either it was sold orders only. He only paid his help $5 an hour. So he had no one that could work on any thing and half the stuff they sold was setup wrong. So the neighboring dealers all got stuck doing his warranty work and fixing the setup problems.

This dealer was not the only one doing this. JD could see that this was bad for long term business. So they came out with all new contracts that split things up and had written requirements to keep each contract. They did not let many of the old dealers get the new contracts. They usually would let them be an CP dealer but no longer AG. This was the start of the dealership consolidation.

I don't like the big multi store supper chains but the single stand along dealers are having trouble making enough profit to stay open.

Replies:

• Re: Why I avoid Mother Deere NCWayne 19:44:23 07/28/12 (0)

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