DIS 2024 Agriculture Industry Trends Report

The DIS 2022 Agriculture Equipment Industry Trends Report is a comprehensive overview of what Ag dealers will be focusing on in 2022. This report compiles insights from surveys, Ag industry experts, and hundreds of Ag dealers across North America, to dealer prepare for the year ahead.

2024 USING DATA TO MAXIMIZE PROFITS

AGRICULTURE EQUIPMENT INDUSTRY TRENDS REPORT

FOREWORD FROM THE GENERAL MANAGER

SHANE WALDEMAR General Manager, DIS

When I think about what the next year holds for dealers, I think about the pace of change in technology. Why? Because, as humans, we’re used to a world that changes at a steady pace. Take the ag business as an example – breeding new crops can take years, investments in equipment can take ages to pay off, and so on. Our industry is frequently making educated guesses about the future. Now, we have the power of data to help us in this era of rapid technological advancements. The ability to analyze large volumes of data is the key to unlocking valuable insights and making informed decisions for your dealerships’ best interests – to optimize inventory management, enhance customer experience, insights into what’s selling and not selling, and so much more. In this report, we share changes in the ag equipment market and in the world of dealership technology to help dealers be profitable in the year ahead.

What's Trending in 2024:

1. Adapting to Changing Market Conditions What Does the Market Look Like? Navigating the Terrain of Rising Prices Dealership Consolidation to Continue Is Autonomous Equipment the Future of Ag? Leveraging Data for Profitability 2. Finding, Hiring, & Retaining Talent The Marriage of Metal and Microchips

1 2 3 4 5 6 7 8 9

The Link Between Productivity and Employee Happiness What Role Does Automation Play in Retaining Techs? Show Me the Data 3. Customer Retention & Attracting New Customers Customers Want More Personalized Interactions with Dealers Using Data to Enhance Your Dealership Customer Experience

10 11 12 13 15

Adapting to Changing Market Conditions 01.

What Does the Market Look Like? Navigating the Terrain of Rising Prices Dealership Consolidation to Continue Is Autonomous Equipment the Future of Ag?

2 3 4 5 6

Leveraging Data for Profitability

Trend Highlights

Market Changes

Challenges with Rising Prices

Tech Advancements, Automation, and Data

The Global Agriculture Equipment Market is expected to grow at a forecasted yearly growth rate of 6.4%. The demand for new equipment is spilling over to the used equipment market, with prices expected to stabilize. We could see over 40% of stores consolidated under big dealers by the end of 2024.

Dealerships are optimistic about the future demand for both new and used equipment, but are also concerned about potential interest rate hikes by the Federal Reserve. Offering flexible financing and diversifying equipment offerings can help dealers cater to a broader audience.

The drive for automation in farming stems from the need to eliminate repetitive tasks, reduce skilled labor costs, and function more efficiently. There's a shift towards smaller, more efficient equipment models. Leveraging data and analytics tools will help dealers track their dealership’s performance and enhance their decision-making.

1

What Does the Market Look Like?

First things first, let's talk numbers. The Global Agriculture Equipment Market was valued at a whopping USD 166.9 Billion in 2022. It soared to 305.6 Billion in 2023. That's a consistent yearly growth rate of 6.4%. If we keep up this momentum, by 2024 and 2025, we'll see this market cruising at about USD 187.5 Billion and USD 202.6 Billion, respectively.

The cost of new equipment has completely surpassed the rise in commodity prices, therefore, farm income will be down and less opportunity to sell costly new equipment.

JAMES WEISENBERGER Selby Implement Company

What’s the Buzz in the Used Equipment Market?

The next couple of years promise a robust used equipment market. As the demand for brand-new machines rises, there'll be a spillover effect on used equipment. But here's the twist—prices might stabilize a bit. As more folks buy new equipment, they'll trade in their old ones. Hence, the inventory of used equipment could see a gentle rise. With the demand for both new and used equipment staying strong for the foreseeable future (at least the next 12-18 months), dealerships can rest easy... (kind of). Many are keeping their fingers crossed that the Federal Reserve will hold back on increasing interest rates. That interest relief could further boost demand.

What This Means For Dealers:

• With the used equipment market buzzing, accurate valuation is crucial. • Used equipment will always have its charm. Ensuring quality and offering certified refurbished products could be a game-changer. • Consider packages or promotions that encourage trade-ins. If new equipment sales surge, harnessing the influx of used equipment can be both a challenge and an opportunity.

2

Navigating the Terrain of Rising Prices The Purdue Ag Economy Barometer suggests that farmers are thinking twice about purchasing farm equipment, with rising interest rates playing a significant role in their decision-making. In the past, whenever interest rates shot up, farm operators tended to play the long game. They stretch the replacement cycle of their farm equipment, often resulting in a deceleration of equipment sales. In a DIS survey of ag equipment dealers across North America , 80% of respondents stated rising product prices as an imminent challenge (second only to hiring/retaining talent). It's evident that affordability is at the forefront of concerns for ag equipment dealers.

What are some of the biggest challenges you expect to face in the year ahead? Check all that apply.

15 %

Cybersecurity

87 %

Hiring / retaining talent

37 %

Attracting new customers

28 %

Customer retention

80 %

Rising product prices

44 %

Parts shortages

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

What This Means For Dealers: • Given the rise in interest rates, understanding, and empathizing with your clientele's financial constraints is paramount. Offering flexible financing options or loyalty programs could be beneficial. • Diversify your offerings , perhaps by increasing the range and quality of used equipment, to attract a broader clientele.

3

Dealership Consolidation to Continue

Dealership consolidation isn't taking a breather. According to Ag Equipment Intelligence’s 2023 Big Dealer Report , big dealer numbers dipped from 214 in 2022 to 206 in 2023. However, the total number of stores owned by big dealers increased from 2,589 in 2022 to 2,632 in 2023, an increase of about 1%. In 2023, large dealers owned 39% of total ag stores in North America compared to 37% in 2022. If the trend continues, we could see over 40% of stores under big dealers by the end of 2024.

No one cares about customers like an owner who has his life invested in the dealership as opposed to hired managers. The customer is also short-changed by big conglomerates that don't care about the needs of the customers. They are now charging much higher labor rates, and overall, the cost of business has gone up for the customers.

PHILIP BROOKS Brooks Sales Inc.

What This Means For Dealers:

• Smaller dealerships need to focus on niche markets, personalized service, or unique selling propositions to remain competitive. • The increased consolidation implies an emphasis on efficiency. For those in the midst of this consolidation wave, streamlining should be a top priority . • Building and maintaining strong community and customer relationships will be a protective armor.

Optimizing Inventory Management Adaptability remains the centerpiece of a successful 2024 inventory strategy. According to a survey from the Association of Equipment Manufacturers , over two-thirds of ag equipment manufacturers say supply chain issues are improving. As we transition into a phase of supply chain improvements, dealers might find themselves in a more favorable position, but it also brings forth new considerations. Leveraging digital tools, such as DIS Analytics , to monitor and manage inventory can ensure real-time tracking, better inventory control, and data-driven, timely actions.

How does DIS Analytics help with inventory management?

With DIS Analytics, dealers get real-time tracking of their inventory. This means no more guessing games or time-consuming stock takes. With a few clicks, dealers access a comprehensive view of what they have on hand – be it at a specific branch or within a particular class.

And for each part, detailed analytics shed light on sales history, various price points, and stock distribution.

4

Is Autonomous Equipment the Future of Ag? The integration of technology into farming isn't new, but the scale and depth of autonomy are. Autonomous machines aren’t just doing the work. Now, we're looking at machines that don't just perform a task but optimize it, learn from it, and even refine subsequent actions based on past data. What’s Influencing Autonomous Adoption?

The push for automated machinery is driven by the need to eliminate repetitive tasks and cut down on skilled labor costs. With the technology in place, farms can function more efficiently and reduce operational expenses. However, autonomous machinery is also influencing equipment design. The market is witnessing a surge in demand for smaller, lightweight, and less powerful equipment, marking a departure from traditional models. In a late 2022 survey by Ag Equipment Intelligence , approximately one in three growers are gearing up to invest in autonomous farm machinery in the next ten years .

For farms looking to expand, autonomous equipment offers a scalable solution. Instead of hiring more people, farms can deploy more machines that operate under a central control system.

What Can Dealers Do?

• Offer Flexible Financing Options: Consider introducing flexible payment plans, zero-interest periods, or tie-ups with financial institutions to ease the purchasing process. • Subscription Models: A shift towards subscription-based models, where farmers pay for usage rather than ownership, could reduce entry barriers. This model mirrors the software-as-a-service (SaaS) industry, where users pay for access and benefits rather than the product itself. • Rental Programs: Dealers could offer rental programs, allowing farmers to rent autonomous equipment for specific periods or tasks, opening up new revenue streams for dealers.

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Leveraging Data for Profitability The Machinery Advisors Consortium notes several crucial Key Performance Indicators (KPIs) for dealerships to stay on top of, including return on assets, parts absorption, employee turnover rate, and others. These metrics aren’t just numbers. They’re stories. For example, ROA indicates how effectively a dealership is using its assets to generate profit. A higher ROA indicates efficient use of assets. If a competing dealership has an ROA of 5%, it indicates you're using your assets twice as efficiently to generate profits. Same with your employee turnover rate. If the rate is higher than industry or regional averages, it suggests there might be issues that need to be addressed, such as wage, work environment, or management.

In a DIS Survey of ag equipment dealers across North America , 61% stated they sometimes use data analytics and reporting, and a noteworthy 20% said they use it extensively. This points to a growing trend. As we move into 2024, leveraging data and analytics will become not just an added advantage but a necessary tool. Hence, it's paramount to ensure that you’re feeding your analytics with quality data. This might mean training staff to ensure they input data meticulously or investing in better data reporting tools, such as DIS Analytics , that turns data into actionable insights.

Do you use data analytics and reporting to guide decision-making at your dealership?

4 %

20 %

15 %

61 %

No, but want to start

Yes

Sometimes

No, and don't plan to

6

Finding, Hiring, & Retaining Talent 02.

The Marriage of Metal and Microchips

8

The Link Between Productivity and Employee Happiness What Role Does Automation Play in Retaining Techs?

9

10 11

Show Me the Data

Trend Highlights

Evolving Technician Skillsets

Employee Wellbeing and Leadership

Data-Driven Insights for Technician Productivity

Technicians now need proficiency in both mechanical troubleshooting and software diagnostics. While there's a need for new talent with mixed expertise, it's equally important to upskill current technicians. This can be achieved through structured knowledge transfer programs, regular training, and investing in the latest diagnostic tools and software.

Tools designed to streamline tasks and reduce friction can enhance daily work experiences for technicians, making them feel more valued and productive. Management must not only focus on hiring but also on the well-being of current employees. Effective leadership that prioritizes communication, empathy, and feedback can boost employee satisfaction and retain talent.

Using tools like DIS Analytics, dealers can easily identify high-performing technicians and areas that need further training, allowing for real-time collaboration on improvements. Automating processes such as parts ordering, and maintenance scheduling can increase efficiency and reduce potential discrepancies.

7

The Marriage of Metal and Microchips

The rise in autonomous equipment requires a new breed of technicians – individuals who are not only well-versed in mechanical troubleshooting but also have a strong grasp of software diagnostics and updates. The shift from hands-on mechanical repairs to a mix of hardware and software problem-solving has widened the talent gap in the industry. In a DIS survey of ag equipment dealers across North America , 87% stated hiring/retaining talent as the biggest challenge they anticipate facing in the year ahead.

What are some of the biggest challenges you expect to face in the year ahead? Check all that apply.

15 %

Cybersecurity

87 %

Hiring / retaining talent

37 %

Attracting new customers

28 %

Customer retention

80 %

Rising product prices

44 %

Parts shortages

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

A considerable segment of today's ag equipment technicians has honed their skills through years, if not decades, of hands-on experience. Their expertise is rooted in tactile familiarity with machinery, informed by years of troubleshooting and understanding machinery's idiosyncrasies. However, this knowledge is often undocumented . There's a pressing need to infuse fresh talent who bring a mix of mechanical and digital expertise. But this is just one side of the coin. On the other side lies the challenge of upskilling current technicians.

The number of students and younger people even considering going into the Ag service industry has dropped significantly over the past few years and the skill set they need has dramatically changed as well. Fewer techs entering the industry means higher cost to hire those that are qualified and have the skill set.

JAMES WEISENBERGER Selby Implement Company

8

What Can Dealers Do?

• Knowledge Transfer Programs: Create structured platforms where seasoned technicians can share their insights with newer members of the team. • Planning: Have 30, 60, even 90-day plans with regular training in between for ongoing learning. • Investment in Tools and Software: Ensure your techs have access to the latest diagnostic tools and software to prepare them for any challenge.

Digital Transformation in the Service Department

The first level includes job boards where all open work orders are listed. Dealership management software can help manage work orders through their entire service cycle. The second level entails work orders, which is the transition from paper-based to electronic work orders. This helps to reduce errors and increase the speed at which work orders are processed. The third level is communication, which involves moving away from traditional phone and email communication to more automated and real-time communication methods. The fourth level is reporting and analytics, which involves getting the information people want when they want it, both inside the dealership and outside to the customer. The fifth level is the use of machine data. That is, how do we use machine data in our service department to automate and improve what we’re doing? The sixth level is machine-driven scheduling, such as when a machine needs preventative maintenance .

The Link Between Productivity and Employee Happiness In a DIS survey of ag equipment dealers across North America , 62% stated lack of qualified candidates as a top challenge with hiring technicians in the next year, followed by 22% who said competition. As highlighted by industry voices, like Bill Hoeg from the Machinery Advisors Consortium , the combined pressure of adapting to new technology and potentially increased workloads due to staff shortages can negatively impact employee morale.

What challenges do you anticipate your dealership will face in hiring technicians in the next year?

7 %

9 %

22 %

Lack of qualified candidates High competition

Limited budget for salary Difficulty training

62 %

9

For management, this underscores the need to address not only hiring challenges but also the well-being of current technicians. Leadership plays a pivotal role in shaping employee attitudes. Leaders who display empathy, possess excellent communication skills, and lead by example can inspire their teams, fostering a culture of mutual respect and understanding. They should prioritize regular feedback sessions, both formal and informal, to understand their technicians' concerns and grievances.

What Role Does Automation Play in Retaining Techs?

In a DIS survey of ag equipment dealers across North America, when asked what service processes dealers would like automated in 2024 , the top response was parts ordering, followed by planned maintenance scheduling and analytics reporting, both in the second spot at 37%. Creating and maintaining a digital record of each service job increases internal transparency, payroll reporting accuracy, and overall efficiency in the service and sales departments. The right automated tool will minimize the risk of compensation inconsistencies or disputes and increase the likelihood of technician retention.

What service processes would you like automated? Check all that apply.

37 %

Analytics reporting

11 %

Invoicing

33 %

Status updates

37 %

Planned maintenance

56 %

Parts ordering

26 %

Technician scheduling

0%

5%

10% 15% 20% 25% 30% 35% 40% 45% 50%

55% 60%

10

DIS Service 360 for Service Management:

Service Scheduling: A scheduling tool enabling service managers to plan and monitor jobs and quickly respond to daily changes.

Planned Maintenance: A feature that optimizes how dealers manage ongoing maintenance visits, such as creating automatic maintenance appointments based on customizable triggers like time or meter readings.

Work Order Task Board: A tool that gives a clear view of all existing, planned, and completed orders and to easily assign new tasks to technicians.

Show Me the Data DIS Analytics provides canned or customizable analytics dashboards that use data and deliver it through a platform that is available to anyone, at any time, from anywhere. For example, the Financial Dashboard gives you a snapshot of your dealership’s performance, and the Parts Inventory Dashboard helps with gauging stock status and underperforming parts. There’s a dashboard for your service department, too, so you can quickly identify your best-performing technicians. DIS Analytics doesn't just show you the data; it empowers you to act on it.

Data mining

Access Data in Real-time

DIS Analytics

Visual Presentation of Data

Easy Comparison Between Locations, People, Time, etc.

Easily Communicate

What This Means For Dealers: • Performance Insights on the Go: Instead of navigating through vast spreadsheets, dealers can immediately pinpoint technician performance trends, challenges with specific tasks or equipment models, and collaborate in real-time to strategize improvements. • Empowering Technicians: Technicians have the autonomy to view and assess their own performance data in DIS Analytics. This proactive approach allows them to address areas of improvement even outside formal review contexts. • Enhancing Employee Satisfaction with Automation: The key to retaining a happy workforce often hinges on their daily work experience. Tools like DIS Service 360 streamline tasks, reduce friction, and ultimately make technicians feel more valued and productive in their roles.

11

Customer Retention & Attracting New Customers 03.

Customers Want More Personalized Interactions with Dealers Using Data to Enhance Your Dealership Customer Experience

13 15

Trend Highlights

Digital Touchpoints

Leveraging Text Messaging

Importance of Data in the Customer Experience By understanding customers' communication preferences through data analysis, dealerships can further customize their interaction methods, ensuring satisfaction and bolstering relations. CRM systems play a crucial role in maintaining and tapping into this data, enabling dealers to stay connected with their customers and prospects and deliver timely and relevant information.

Customer portals are vital digital touchpoints, allowing customers to interact with dealerships anytime and anywhere, making the experience more seamless and aligned with modern consumption habits. Online reviews give potential customers their first impression of your dealership. Engage with existing customers to share their experiences and enhance your online image.

48% of ag equipment dealers use text messaging for marketing – over half have yet to adopt it. 98% of text messages are read, with 95% of them getting a response within the first 3 minutes. Integrating text messaging with dealership management software can enhance the customer experience; for instance, updating customers about the repair process.

12

Customers Want More Personalized Interactions with Dealers

In an increasingly digital world, customers often take to the internet to explore products, services, or companies . The rise of the digital farmer is most prominent among the younger generation. Just like their contemporaries in other sectors, young farmers are keen digital adopters.

What Can Dealers Do to Create a More Tailored Experience?

1. Customer P ortals

Customer portals allow customers to get what they need from your dealership on their own time, using their own devices. They can easily access records shared with them, which modernizes their experience. The self-serve access is great for dealers and customers, as it lowers the number of requests for support and makes it easy for customers to get in touch with your dealership.

2. Harness the Power of Online Reviews

They’re not just feedback; they're modern-day endorsements. A positive online review can amplify your dealership's reputation. And when your dealership shines with sterling reviews right there on Google, it not only boosts credibility but also encourages new customers to walk in.

But how do you get more of these positive reviews? Engage with your customers. Through tools like DIS Notify , encourage them to share their experiences. A prompt after their visit, a quick survey about the service they received, or a gentle reminder to drop a review not only garners feedback but also sends a clear message: you value their opinion. In a DIS survey of ag equipment dealers across North America , when asked if dealers would increase their focus on online sales in the next year, 48% said moderately, and an additional 15% said yes, significantly.

Will you be increasing your dealership's focus on online sales and e-commerce in the next year?

37 %

48 %

15 %

No change in our approach

Yes, moderately

Yes, significantly

13

3. Reach Customers Through Text Messaging

Although emails are still a popular method for communicating with customers, text messaging is an underutilized tool that can significantly enhance your customer communication strategy. Text messages generally have a more personal, urgent feel than emails, increasing the likelihood of customers opening and even responding. An astonishing 98% of text messages are read, and 95% are read and responded to within 3 minutes .

In a DIS survey of ag equipment dealers across North America , 48% currently use text messaging for their marketing, while just over half of respondents still don’t and a not so insignificant number say they don’t plan to start either. An integrated text messaging solution with your dealership management software, like DIS Notify , will enhance communication with customers, build brand recognition, and improve your dealership’s customer experience. You can send them a welcome message as the first outgoing message to your customer, text them updates during the repair process, and respond directly to the message. This sets a positive tone for the conversation and lets your customer know what to expect.

Do you use text messaging to send service status updates, marketing promotions, etc., at your dealership?

37 %

48 %

15 %

No, and I don't plan to start

No, but want to start

Yes

14

Using Data to Enhance Your Dealership Customer Experience

4 Ways a CRM Can Strengthen Customer Relationships

DIS Notify Tips

Create your canned/templated messages to ensure consistency in your messages with your customers and across locations Always include the name of your dealership on each outgoing message Use a welcome message as the first outgoing message to your customer Add a survey message so customers can leave a review about their service experience Engage with your customers by asking them questions when you text

Central Place for Storing Data: retrieve entire interaction history with a customer without manually piecing together timelines Improve Internal Dealership Communication: CRMs make data entry consistent and often integrate with a DMS, making it easier for customer information to be shared and communication to be automated Manage and Evaluate Sales Team Performance: Evaluate sales performance in specific areas or for the entire team. Sales reps can also track what needs to happen next in the sales cycle Never Miss a Lead: A CRM helps you identify and follow up on promising leads and even remind you to get in touch with a customer at regular intervals.

Your dealership also collects a lot of data internally. But, if that customer data is not stored or segmented correctly, you’re missing out on the opportunity to use it to improve your dealership’s customer experience. That’s where a customer relationship management (CRM) system is useful. It’s one of the most powerful tools to help you keep in touch with your customers and prospects, contact them, and provide them with relevant information at just the right time. Curating comprehensive customer profiles and tracking relevant data points can transform the customer experience, especially since communication is at the heart of customer relations. By tapping into data, dealerships can discern their clientele's communication preferences. If texting emerges as a favorite, as the DIS survey suggests, integrating it can boost customer satisfaction exponentially. Ask your customers how they prefer to be communicated with.

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DATA AT THE HEART OF DEALERSHIP DECISIONS

The future of the dealership landscape is set against a backdrop of dynamic evolution, with data playing an increasingly pivotal role in shaping that trajectory. The unpredictable nature of market dynamics demands more than just intuition; it calls for agility and foresight. Before, we would adapt as things changed. But now, with data on our side, we can be more prepared, spotting trends before they fully emerge. Data doesn't merely offer a reactive solution; it paints a proactive path forward. As we gear up for what lies ahead, we do so with the confidence that our decisions, backed by insights, will not only cater to but anticipate the needs of the market, shaping a prosperous future for dealerships.

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DIS Analytics helps your team work better together with ready-made or customizable analytics dashboards accessible anytime, anywhere, for everyone.

Book a Demo to See DIS Analytics in Action: www.discorp.com/contact-us

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