John Deere Mega Dealerships

Just sort of interest to me, Five John Deere Dealers have a total of 76 locations, average of 15 each, These are in Mostly in Illinois and Indiana, some in Kentucky, Southern Michigan and Southern Wisconsin. Another six dealers have thirty locations. Wonder why Corporate John Deere has set it up this way?

To consolidate the number of dealers so that they can eventually start buying them up themselves? For now it gives them much more control of the dealers, with the millions of dollars the dealers have invested not pleasing mother Deere can get real expensive real quick. It also make it much harder to jump ship and sign on with another company and abandon Deere & Comany

This whole thing will eventually backfire on them and when it does,it'll be too late. Allis Chalmers bought out Rumley just to get their dealer network. Other brands are just plain offering better and more personal service,at least around here. When enough people get sick of it and leave,it'll cost too much for new independent dealers who would give personal service,to start up as Deere dealers.

Instead of competing with one another, they join forces together and compete against their competitors.

That is why the regional NH dealers joined together here. Case was the first in this area to go the mega route. My understanding is that in many areas here it was a sad state of affairs in terms of Case dealers so corporate kind encouraged it. There was blow back after the Case IH merger when everybody's favorite local IH dealer(s) was closed up in favor of Case.

That's a very good question. I doubt there is any one single answer and all we can do is speculate.
It sure seems to go against the way they used to do business ?
I too have noticed a decline in the willingness to help customers. Used to be if you didn't like one you could easily go to another. Now they are all owned by the same boss.

John Deere's poor customer service will ultimately be the demise of one of the great American agriculture success stories. Not all dealership are bad but I have really seen a decline is competitive pricing and accountability. They cant expect to live on warranty work forever!

i'm in Wyoming, my closet was a family owned dealer until approximately 7-8 yrs ago, was bought out by another dealer in Arizona, has become a 23 dealership chain since then. I switched my business to another dealer 100 miles away that has been a family owned two store dealership for as long as I can remember. I was chasing better service and better prices. They were just forced into selling to another dealership chain over the end of last year, that now consists of 17 stores. I'm waiting and hoping that the service that I have come appreciate doesn't go away.

It's happening right now in my area. The JD dealer that has been a family owned single dealership since the 50's in my town recently was sold to the dealership 50 miles north. They owned 6 locations prior to the purchase, weren't supposed to be many changes locally, the selling owner would stay on as manager for 5 years (retirement), same service manager ect. They did plan on a new facility, which was needed and the reason the existing owner decided to sell.

In the 15 months since the sale the buyer has bought three more dealerships in the area, has already closed one and is closing another as we speak. They're building new in my town and about 60 miles away. In my town the guy who had been service manager for that last 20 some years was told when the new facility was open they had to generate the revenue of 3 stores, equal to that the previous store in my town and the two facilities they closed had generated and if the volume wasn't there to do it they had to raise prices until it did (huh?) The guy declined to stay on as service manager and will instead stay on as a mechanic (for now) The previous owner resigned as of Dec 31st rather than stay on as manager under the new ownership's agenda.

People don't know what to think, went from a customer friendly mom & pop operation to a greedy corporate entity with a spanking new facility. Guess we're lucky to get the new facility and the jobs in our town rather than be one of the facilities that was closed and then have a 40 mile drive to deal with the same entity or an even longer drive to a dealership they don't own which may be no better. In the end lack of competition is never a good thing for the customer.

Warranty Work? What a wonderful way to watch service revenue blow right out your doors. Trust me on that one.

Where there were once 50 farms, and the opportunity to sell and service 100 tractors, 50 mowers, 50 rakes, 50 manure spreaders, 200 wagons, 50 forage harvesters, 50 balers, etc., there are now 5 farms.

The customer base is shrinking and the equipment is getting bigger. That kills your volume, and you have to move volume to make money. If you're fighting over a handful of customers with another Deere dealer across town, it hurts both dealers.

It's really a form of "mercy killing" on the part of Deere to tell the smaller dealerships to sell out or close. Otherwise these dealers would probably drive their businesses straight into bankruptcy and make Deere look bad doing it. Man cannot profit on parts sales alone.

Farms are consolidating and getting bigger. The dealerships need to follow suit.

Deere is creating a monopoly in a way. Each store used to bid against the other store, creating less profit for mother deere. So now dealerships have territories, and deere has made it unprofitable for a dealership to sell outside its territory. So there is no competition. Makes deere more money, because some people just have to buy deere. In the process..anyone who is not farming 5k acres kind of gets lost in the shuffle. Dealers dont make nearly as much money on a 20k used tractor as a 300k new one. Its a fact that farms between 300-1000 acres are getting fewer and fewer. Deere has chosen to supply the big boys. I wonder if someone(kubota?) will try to step in to take that medium size market.

and what do you guys think about Case having one co own over one hundred dealerships

Randy,No harm meant,but if it wasn't for DEERE,we would not have ANY ONE(Deere 4-30Mi.CIH 1 15Mi.next 80-90Mi,Agco 1 50MI.next 80-100Mi.)AGCO has closed down more dealers then Deere could even think about.That is why I don't recommend any Pre Agco product and now Case somewhat to anyone looking for a used tractor.Neighbor,who was maybe more Oliver then you are had to rent a tractor in 2012 because his White 2-150AWD was down over 9 months because Agco couldn't provide parts for it and now he is FNH & CIH 98%.

One Deere dealer in northwest indiana that had been a stand alone store that grew to 6 locations and was in bussiness for 114 1/2 years had to merge with anouther Deere dealer in Indiana and I think lower michigan did it because of lack of manpower. Father and son just could not keep up with everything so jopining with the other company with now a total of I think 15 stores they have a specilast that handles each coperate division for the chain and they can consecrate on managing the stores to help their customers instead of trying to keep up with Deere corp. The Father is getting close to 60 and the boy is in his 30's now and no other family to join. Hard desision for them but just could not handle it all any more.

I look at all the replies from folks who don't work for Deere or ever have and just wonder why they are not in the equipment business with all this wisdom.
And if you really don't like John Deere you call them mother Deere.

John Deere want to copy Cat. I was at a dealer principle meeting 20 years ago when they first started talking about this. The JD management guys where drooling thinking about it.

At that time Cat sold three times the volume of JD in gross new equipment dollars. JD at the time had 2400 dealerships in the US. Cat had under 500.

That is what JD is driving for. Most of the farmers are going along for the ride.

Here is why I say this. IF two car dealerships are owned by the same person. They can't fix the price between the two stores. Meaning if I price a car at one store then go to the other one they can't share my deal/quote with the second store. It is called "price fixing". It is illegal.

Now JD has a program that ALL salesmen use at the multi store dealerships. It is called sales quote. So when you go and get a price at the one dealership in the chain of stores that quote is entered into the computer system. So if you go to the neighboring store and go to get another price/quote the original quote will be in the system already. The second salesman is not allowed in 99% of the stores to quote you a lower price. THIS IS real 'price fixing" but the farmers are not raising cane about it so it goes on every single deal.

I have not bought a single piece of "NEW" JD equipment since JD forced all the stores around me to combine or close. I still have good parts departments. SO I buy used at whatever store has the best bargain. That usually is a CIH or Agco dealer that ahs traded a JD piece in.

Just updated the one round baler. I sold the JD 567 and bought a one year old JD 569 with only 1500 bales through it.

It came out of MN. The fellow that owned it got burnt when his local dealership was forced to merge with a multi store chain. He traded in ten pieces of JD equipment on all CIH stuff. I called and talked to him. He did it after the owner of the multi store chain told him to his face that he would "have to deal" with him since he owned all the stores around the customer. The customer proved the JD dealer wrong. He will be totally red and blue in one more year, Kinze planter.

I really think JD is in for some tough times. The mega stores and large farm owners all are tied to the cash grain market. I really feel that the cash grain market is going to tough to make a profit in for the foreseeable future.

In the very early 1990s, our local John Deere dealership was bought by another dealer who then re-located and built a new facility on the main highway just outside town. This discussion roused my curiosity, so I Googled the name of the company, found that their headquarters are in Virginia and they have a total of 30 dealerships in VA. N.C. and S.C. Their personnel re friendly enough, but you can tell, they are there to make money.

The area Case dealer was "mega" a couple of decades before any of the others got started here.

They don't want dealers competing with each other, so sayeth the former owner of the largest volume one lot dealer in the company who recently was forced by momma deere to sell out to the chain.

Dave

Niccolet or New Ulm?

I live between the two..... Only Green thing I have is a planter, and Shoup delivers faster Thant the mega dealer does.....

The 2 Case dealers I could go to actually chained up a long time ago; but they have friendly folk, knowledgable folk, and work with the communities they are in.

The new JD chain here - well, not so much.

Paul

Could be SE of me a bit too, couple of mergers and bigness and closings there too.

Farmers are bigger and fewer, and machines are many times more complex. I understand there is going to be some changes in the dealer network as well, I better mention that too....

Things will change, they have to.

And I think ag is in for hard times again, ecconomy is -strongly- against up, politicians and some public opinion is against us any more these days. Both national and world economics are looking to line up to be bad for ag in the USA....

We are going to get into belt tightening mode here by the end of this year.

I would not want to be an ag dealer right now. We farmers used the last few years to update our equipment some. And belt tightening, we can sit on our equipment a year, maybe two.

Man there will be bankruptcies in the equipment world.......

The Red side has that Titan deal, dozens of dealerships - and in money trouble already.

Paul

(quoted from post at 23:11:50 01/16/15) Could be SE of me a bit too, couple of mergers and bigness and closings there too.

Farmers are bigger and fewer, and machines are many times more complex. I understand there is going to be some changes in the dealer network as well, I better mention that too....

Things will change, they have to.

And I think ag is in for hard times again, ecconomy is -strongly- against up, politicians and some public opinion is against us any more these days. Both national and world economics are looking to line up to be bad for ag in the USA....

We are going to get into belt tightening mode here by the end of this year.

I would not want to be an ag dealer right now. We farmers used the last few years to update our equipment some. And belt tightening, we can sit on our equipment a year, maybe two.

Man there will be bankruptcies in the equipment world.......

The Red side has that Titan deal, dozens of dealerships - and in money trouble already.

Paul

Click to expand...

Funny thing with Titan. 2 stores both owned by Titan, about 40 miles apart have slightly different prices on parts. I was with a friend who needed new batteries for his combine a couple of years ago. He was looking for another tractor too. He ask at the one about the tractor and was told the other dealership had what he wanted on the lot and he could go there to look at it. On our way out he stopped by the parts counter to ask about the price of the batteries. When we got to the other dealership he again ask about batteries (1st one would have to order them, out of stock) The 2nd one the batteries were about 10 bucks cheaper and in stock. So he got them there. He also bought the Magnum too.

I've been watching the stuff on Titan. Wonder if they are too big to fail.


Rick

I guess it just depends on where you live. Michigan always seemed to be a big market for Oliver. Seems like what we would have called BTO's back in the day ran Olivers. That devotion to the brand kept dealers going even when White filed bankruptcy and wasn't even in business. Allis Chalmers had a fair market share too among smaller farmers. I have two former Allis dealers,two former Oliver dealers,and one all new Agco dealer all within a reasonable driving distance of me. There was a Moline dealer who went to Ford (New Holland now) when the whole White debacle happened,but they're still in business.
Lucky me I guess.

We have one of the only independent Deere dealers left in the state of MN at Preston MN. I traded my round baler this fall. I priced one at the local big chain Deere dealer, Sema, because a friend of mine is a salesman there. He couldn't give me a price until he ran it thru his controller at headquarters. At Preston the salesman gave me a price on the spot. Preston Equipment beat Sema's price by $8000! Exact same baler. When I informed my friend at Sema that he lost the deal he shrugged and stated "its only a matter of time before we own them and you have to deal with us".

We lost 2 older big Oliver dealers at the White start and a smaller MM dealer tried to expand to fill the void,but failed.Then Agco closed 3 remaining Oliver-Whites down when they took over.They just came in(2014) and closed a 3 store MF dealer down without any warning.

Not the case. If dealers meet certain requirements, such as keeping up with mandatory PIP's etc., they get paid close to 100% of shop rate at flat rate.

Nothing is too big to fail. I have noticed they seem
to be running a lot more stuff through auction time.