Europe's farm machinery market is poised to return to growth
in 2017, industry group Cema said, flagging a resurgence in optimism among the
bloc's ag equipment sector to the highest in five years.
Brussels-based Cema acknowledged a soft start to 2017 for
European ag equipment sales, with the tractor market shrinking by a further 1.3%
in the January-to-March period, with declines in the Netherlands and, in
particular, France offsetting rises in the likes of Germany, Spain and the UK.
"Given the size of the French market, it was mostly due to
the sharp decrease in France," where shrinkage of 26% was reported, "that the
total European tractor market remained in the negative in the quarter", the group
However, the European farm machinery market overall is
expected nonetheless "to return to growth again" in 2017, said Cema, flagging
improved industry optimism.
"Sales expectations for most European countries are
Indeed, a monthly barometer of sector sentiment has risen to
its highest since May 2012, Cema, flagging an "increasingly positive mood
clearly shows sharply increasing business expectations for the coming months.
"Whereas in October, a majority of companies expected a
shrinking or stable market in the six months to come, a majority of 53% now
expects their turnover to grow in the next six months," the group said.
A sub-index on the industry's future expectations hit its
highest since 2011.
The optimism reflected in part forecasts for exports, with Cema
flagging that "the business outlook is somewhat more positive for foreign
However, improvements were expected in many European markets
too, with shrinkage in Italy expected to decline to 2.2% this year, from 3.7% in
2016, and the UK expected to see a flat performance, recovering from 2%
shrinkage last year.
"The tractor market is expected to grow again from a 15-year
low in 2016."
The German market, Europe's second biggest, is seen showing
a "small increase" this year, "bouncing back" after a 5% decline in 2016.
The biggest question mark lies over the French market which,
having shrunk by some 8% last year, looks like extending that decline at least
for the first half of 2017.
The difficulties of the French market were highlighted last
month by equipment giants Agco, the maker of New Holland and Case equipment,
and Massey Ferguson and Fendt group CNH Industrial, which said that the malaise
reflected uncertainty in the run-up to presidential elections, and the boots to
year-ago sales from tax concessions.
Martin Richenhagen, the Agco chief executive, said that in
Europe, the group's "sales declined most significantly in France from high
levels in the first quarter of 2016, which were, as you remember, stimulated by
"Growth in the United Kingdom and Germany offset most of the
decline in the French market."
'Feeling a lot better
At CNH Industrial, chief executive Richard Tobin said that "we'd
like to see the elections in France to conclude because that may give some boost
to the weakest market in Europe right now, which is the France market.
"Really, the only market in Europe that's significantly
negative is France."
Indeed, CNH ditched ideas of a 5% decline in European combine
and tractor markets this year, seeing instead a flat performance.
"We're feeling a lot better about the European demand than
we were when we gave out guidance for the full 2017," in January, Mr Tobin said.
"We see increased demand in Eastern Europe, including
Ukraine. We see good demand in small tractors, particularly in the southern
"Germany has actually returned to growth during the month of
March. The UK, despite Brexit fears, has actually been performing quite