The SCUT and CUT is more Important to Deere than ever
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Thread: The SCUT and CUT is more Important to Deere than ever

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    The SCUT and CUT is more Important to Deere than ever

    Based upon the production numbers of units under 40 hp, these tractors are becoming a bigger part of John Deere's operational results every year.

    The first number below is that of the Under 40hp production category.


    The second number is the total of Deere's US and Canada Farm Wheel Tractor Production, all units.

    The percentage is the under 40 hp as a percentage of the total production.

    In the past, I was able to find the production numbers per model which was also very interesting. I will keep looking and post them when (if) I locate them again. I would like to see the detailed break down of the production of this under 40hp tractor category.

    Just as a reminder, 2011 was the first year for the 1026r and the 1023e. 2013 was the 1025r introduction, the 2032R and Gen 1 2025r.

    The current numbers are usually released in April of the following year in their annual reports and financial data for the prior year.

    2008 - 116,558 units / 231,663 or 50.3%

    2009 - 91,053 units / 181,170 or 50.3%

    2010 - 93,189 units / 183,734 or 50.7%

    2011 - 95,768 units / 190,497 or 50.2%

    2012 - 103,157 units / 207,158 or 49.8%

    2013 - 114,327 units / 227,570 or 50.2%

    2014 - 122,868 units / 236,993 or 51.8%

    2015 - 129,488 units / 232,156 or 55.7%

    2016 - 140,223 units / 231,498 or 60.5%

    2017 - 154,683 units / 244,298 or 63.3%

    Source

    https://s22.q4cdn.com/253594569/file...-Book_2017.pdf
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    Would be interesting to know the contribution margins for the various tractor sizes.
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    It makes sense to me. SCUTs and CUT open up a world of possibilities for the average home owner. You could live in the suburbs and use a SCUT if you wanted.

    What a sweet market to tap into, and it appears to be very successful to them.

    People like me, that have modest acreage, am not a farmer, but want to be able to modify and take car of my land on my own. SCUTs/CUTs are perfect for people like me, and they're relatively affordable, especially with their 0% financing deals.

    I'm glad for them because I hate to see long standing American companies struggle in a global market.

    It's also nice to see the implement market coming out with more and more quick hitch SCUT compatible implements.
    2019 2038R, dual rear vavles, power beyond, 220R loader, 57" HD bucket, iMatch, R3+ tires, JD premium LED light kit, wheel spacers, Artillian diverter, EA wicked root grapple, Heavy Hitch "flexible ballast" and bolt on toothbar, Ken's extended iMatch hook and loader grip, Titan forks, Woods BB60X rotary cutter, CRI stump bucket, Fit Rite hydraulics top link.

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    Sulley:

    These numbers are for the total industry, as I read the reference. Am I correct?
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    So wouldn't the % of market share be a more important number to see. That would give you a better overall picture of trends nationally & global. I'm just asking here, have no opinion on the stats posted. I don't have a horse in the current race.
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    Sales managers at all levels live and die by market share.
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    Don

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    Quote Originally Posted by mark02tj View Post
    Would be interesting to know the contribution margins for the various tractor sizes.
    That would be my first question also - if I am understanding correctly. 50% of wheel tractor sales for one particular series does not mean 50% of their profit comes from this segment.
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    Quote Originally Posted by mark02tj View Post
    Would be interesting to know the contribution margins for the various tractor sizes.
    John Deere reports their financial results in three broad categories,

    Ag and turf

    Forestry and Construction

    John Deere Financial Services

    I have been through their regulatory filings annually (as I do for each company I hold in my portfolio), which is where you might be able to piece together the facts to attempt to determine the actual results for either model categories or specific tractor models. I haven't found enough detail to determine the specific contributions of any particular tractor model other than in broad categories, such as the Deere 4wd tractors are out performing the industry in both sales volumes and financial results and their 2wd tractors are actually slightly under performing in sales results, compared to the industry averages.

    As I am sure you are aware, the specific profit margins and actual unit cost details are kept confidential to the extent not required in the SEC filings for investor disclosure and review and such details are quite proprietary. The entire point of the original post was simply that Deere's production of the tractors under 40 HP are becoming a larger percentage of the overall tractor's produced, nothing more, nothing less. I never implied these smaller units contributed their proportionate share in either revenues or profits. To think that's even possible ignores the fundamental reality of the disparity of selling tractors in the $12,000 to $50,000 unit price range verses those in the $100,000 to $600,000 selling price range. It's amazing to me some of the "conclusions" which are arrived at in almost an argumentative tone by some (not referring to your comment, Mark).

    Deere's customers are their independent dealers to whom they sell and deliver inventory. The dealers customers are those of us here on GTT and others. Only the very large volume transactions occur from Deere directly to the end user. For example, One local farmer in our area just ordered over $30 Million dollars worth of the largest 9 series tractors in both wheels and track models which are being delivered through the dealer I work with. Deals like this are done with virtually no profit to the local dealer on the sale of the new equipment, they are paid a "handling charge" to prep and deliver the machines as well as handle the necessary paperwork. The sales results are reflected in Deere's financial results. Such new equipment sales add very little to the Independent Dealers bottom line. Apparently, they do stand to benefit financially if they successfully dispose of the equipment traded in on the transaction, which is of a different brand.

    Deere's sales prices to the dealers are well established and well known to the dealers in advance. The dealers selling price to the consumer or ag user is what is often found in the discussion threads here on GTT and various prices discussed. The default rate of Deere's equipment loans and leases with the dealership's and their customers remains very small, with the number roughly 0.5% of outstanding loans. Even in the economic turmoil of the housing crisis years, Deere Financials customer default rates were very low relative to other consumer and business loan default rates. Deere is very good at underwriting their loan deals and this is an important part of the Financial Services units results.

    Deere produces the equipment and sells it to their independently owned dealers, most of whom use "Wholesale Notes" borrowed from Deere Financial to floor plan their inventory (or portions of it) as part of that sales transaction to pay for their inventory. When the dealer sells the equipment to the end user customer, many of the customers who do obtain financing for their purchase get it from Deere Financial through the dealership. The dealer uses the money loaned to the customer by Deere Financial which is paid to the dealer to complete the equipment purchase, to repay Deere Financial the Wholesale notes for the floor plan inventory. Then the end user customer pays Deere Financial for the equipment under the terms of their loan or lease agreement. It's interesting how the value of the Deere equipment often returns to Deere through different stages of the process from manufacturing to wholesale sale to retail sale. Even private sales of equipment between individuals can be financed by Deere Financial, if they follow the process.

    When looking at the operating results of Deere and it's contributing components during the economic downturn, which nearly wiped out the Automotive companies and which wreaked such havoc with the housing market, it didn't have the same disastrous financial impact on Deere. Deere Financial is a critical component of Deere's total operations and it's results show that it is a very well managed division within Deere, which is overall, a very well run organization.
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    Quote Originally Posted by SulleyBear View Post
    John Deere reports their financial results in three broad categories,

    Ag and turf

    Forestry and Construction

    John Deere Financial Services

    I have been through their regulatory filings annually (as I do for each company I hold in my portfolio), which is where you might be able to piece together the facts to attempt to determine the actual results for either model categories or specific tractor models. I haven't found enough detail to determine the specific contributions of any particular tractor model other than in broad categories, such as the Deere 4wd tractors are out performing the industry in both sales volumes and financial results and their 2wd tractors are actually slightly under performing in sales results, compared to the industry averages.

    As I am sure you are aware, the specific profit margins and actual unit cost details are kept confidential to the extent not required in the SEC filings for investor disclosure and review and such details are quite proprietary. The entire point of the original post was simply that Deere's production of the tractors under 40 HP are becoming a larger percentage of the overall tractor's produced, nothing more, nothing less. I never implied these smaller units contributed their proportionate share in either revenues or profits. To think that's even possible ignores the fundamental reality of the disparity of selling tractors in the $12,000 to $50,000 unit price range verses those in the $100,000 to $600,000 selling price range. It's amazing to me some of the "conclusions" which are arrived at in almost an argumentative tone by some (not referring to your comment, Mark).

    Deere's customers are their independent dealers to whom they sell and deliver inventory. The dealers customers are those of us here on GTT and others. Only the very large volume transactions occur from Deere directly to the end user. For example, One local farmer in our area just ordered over $30 Million dollars worth of the largest 9 series tractors in both wheels and track models which are being delivered through the dealer I work with. Deals like this are done with virtually no profit to the local dealer on the sale of the new equipment, they are paid a "handling charge" to prep and deliver the machines as well as handle the necessary paperwork. The sales results are reflected in Deere's financial results. Such new equipment sales add very little to the Independent Dealers bottom line. Apparently, they do stand to benefit financially if they successfully dispose of the equipment traded in on the transaction, which is of a different brand.

    Deere's sales prices to the dealers are well established and well known to the dealers in advance. The dealers selling price to the consumer or ag user is what is often found in the discussion threads here on GTT and various prices discussed. The default rate of Deere's equipment loans and leases with the dealership's and their customers remains very small, with the number roughly 0.5% of outstanding loans. Even in the economic turmoil of the housing crisis years, Deere Financials customer default rates were very low relative to other consumer and business loan default rates. Deere is very good at underwriting their loan deals and this is an important part of the Financial Services units results.

    Deere produces the equipment and sells it to their independently owned dealers, most of whom use "Wholesale Notes" borrowed from Deere Financial to floor plan their inventory (or portions of it) as part of that sales transaction to pay for their inventory. When the dealer sells the equipment to the end user customer, many of the customers who do obtain financing for their purchase get it from Deere Financial through the dealership. The dealer uses the money loaned to the customer by Deere Financial which is paid to the dealer to complete the equipment purchase, to repay Deere Financial the Wholesale notes for the floor plan inventory. Then the end user customer pays Deere Financial for the equipment under the terms of their loan or lease agreement. It's interesting how the value of the Deere equipment often returns to Deere through different stages of the process from manufacturing to wholesale sale to retail sale. Even private sales of equipment between individuals can be financed by Deere Financial, if they follow the process.

    When looking at the operating results of Deere and it's contributing components during the economic downturn, which nearly wiped out the Automotive companies and which wreaked such havoc with the housing market, it didn't have the same disastrous financial impact on Deere. Deere Financial is a critical component of Deere's total operations and it's results show that it is a very well managed division within Deere, which is overall, a very well run organization.
    Obviously- you are a very knowledgeable & sophisticated investor. I have no investments of any kind & the only portfolio I have is the one with all the bills I have to pay. Your comments got me thinking that when I hear all this budget talk & the national deficit I wonder what the govt. is really hiding from us because the information given is certainly not telling us what's really going on.

    Don't mean to change the subject here. It's just that your comments here are pretty analytical. They just got me thinking of how much I don't know about what is going on. Maybe that's why I have no investments. If you don't understand something fully, you should not mess with it until you do.
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    Different cycles

    Quote Originally Posted by SulleyBear View Post
    John Deere reports their financial results in three broad categories,

    Ag and turf

    Forestry and Construction

    John Deere Financial Services

    I have been through their regulatory filings annually (as I do for each company I hold in my portfolio), which is where you might be able to piece together the facts to attempt to determine the actual results for either model categories or specific tractor models. I haven't found enough detail to determine the specific contributions of any particular tractor model other than in broad categories, such as the Deere 4wd tractors are out performing the industry in both sales volumes and financial results and their 2wd tractors are actually slightly under performing in sales results, compared to the industry averages.

    As I am sure you are aware, the specific profit margins and actual unit cost details are kept confidential to the extent not required in the SEC filings for investor disclosure and review and such details are quite proprietary. The entire point of the original post was simply that Deere's production of the tractors under 40 HP are becoming a larger percentage of the overall tractor's produced, nothing more, nothing less. I never implied these smaller units contributed their proportionate share in either revenues or profits. To think that's even possible ignores the fundamental reality of the disparity of selling tractors in the $12,000 to $50,000 unit price range verses those in the $100,000 to $600,000 selling price range. It's amazing to me some of the "conclusions" which are arrived at in almost an argumentative tone by some (not referring to your comment, Mark).

    Deere's customers are their independent dealers to whom they sell and deliver inventory. The dealers customers are those of us here on GTT and others. Only the very large volume transactions occur from Deere directly to the end user. For example, One local farmer in our area just ordered over $30 Million dollars worth of the largest 9 series tractors in both wheels and track models which are being delivered through the dealer I work with. Deals like this are done with virtually no profit to the local dealer on the sale of the new equipment, they are paid a "handling charge" to prep and deliver the machines as well as handle the necessary paperwork. The sales results are reflected in Deere's financial results. Such new equipment sales add very little to the Independent Dealers bottom line. Apparently, they do stand to benefit financially if they successfully dispose of the equipment traded in on the transaction, which is of a different brand.

    Deere's sales prices to the dealers are well established and well known to the dealers in advance. The dealers selling price to the consumer or ag user is what is often found in the discussion threads here on GTT and various prices discussed. The default rate of Deere's equipment loans and leases with the dealership's and their customers remains very small, with the number roughly 0.5% of outstanding loans. Even in the economic turmoil of the housing crisis years, Deere Financials customer default rates were very low relative to other consumer and business loan default rates. Deere is very good at underwriting their loan deals and this is an important part of the Financial Services units results.

    Deere produces the equipment and sells it to their independently owned dealers, most of whom use "Wholesale Notes" borrowed from Deere Financial to floor plan their inventory (or portions of it) as part of that sales transaction to pay for their inventory. When the dealer sells the equipment to the end user customer, many of the customers who do obtain financing for their purchase get it from Deere Financial through the dealership. The dealer uses the money loaned to the customer by Deere Financial which is paid to the dealer to complete the equipment purchase, to repay Deere Financial the Wholesale notes for the floor plan inventory. Then the end user customer pays Deere Financial for the equipment under the terms of their loan or lease agreement. It's interesting how the value of the Deere equipment often returns to Deere through different stages of the process from manufacturing to wholesale sale to retail sale. Even private sales of equipment between individuals can be financed by Deere Financial, if they follow the process.

    When looking at the operating results of Deere and it's contributing components during the economic downturn, which nearly wiped out the Automotive companies and which wreaked such havoc with the housing market, it didn't have the same disastrous financial impact on Deere. Deere Financial is a critical component of Deere's total operations and it's results show that it is a very well managed division within Deere, which is overall, a very well run organization.
    To Deere's credit and also Kubota's credit, they identified products and customers that are different than their original end users. Agricultural economic cycles usually are somewhat different than consumer cycles. The farmette/estate owner usually has the means, either cash or credit to purchase a SCUT or CUT when ag users may be hunkering down and not spending.

    Another issue is by getting more units into use, Deere is building future parts and add on sales. Deere and Kubota have done the best job in this market followed by NH. Case/IH isn't in the ballpark at all.

    I'm not sure how much the actual manufacturing process works into those decisions. My understanding is that large farm equipment is still almost hand built which may explain $500,000 for a combine, $250,000 for a tractor. In contrast, the CUT/SCUT process is much more like building cars especially since there is little variation in the options. If you have the market, set up the lines and crank em out.

    Treefarmer
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