Updated: 05/24/24 3:40 PM CST

Farm Equipment has received responses from several dealers regarding Kubota's new acquisition policy.

One Kubota dealer said:

It kind of handcuffs your best dealers from growing. Then why are you going to want to drive forward and try to grow your business? I understand the issues there possibly if it gets too big. But you want people to survive in business. And it could be harder and harder to do that if you handcuff dealers like that. Not good. 

I just hate to see OEMs trying to limit capitalism quite truthfully, but I understand the control and the concern. Because if those dealers got to be 25% of Kubota's business and they went belly up, what happens to Kubota? So I understand that on the flip side.

One John Deere dealer said:

The strategy to cap the number of locations is a surprising move. One that might possibly impact other OEMs in the agricultural industry as it could shift the balance of power among dealerships and manufacturers. 

It may also lead to OEMs needing to reevaluate their distribution strategies, partnerships, and overall presence within each state to adapt to the changing dealer landscape, resulting in OEMs needing to find alternative ways to reach customers and maintain market share in the affected region. Only time will tell. Then again, it may be the greatest strategy ever.

For additional commentary, check out the latest episode of On The Record.

Kubota has implemented a new policy effective May 17, 2024, that will cap the number of Kubota locations any dealer can own per state. According to a memo sent to dealers May 17, Kubota is setting these limitations "to maintain the integrity of our dealer network, support the Local Dealer of Choice philosophy, and promote transparency through the growth process."

News of the coming policy was first covered by Ag Equipment Intelligence on on May 15.

Some of the purposes given in the memo for the new policy included:

  • "promote healthy intra-brand balance and maintain a strong market presence on a state and national level – all for the benefit of Kubota customers."
  • "Over concentration within a designated geographical area can leave our dealer network, customers, and overall market representation vulnerable with a sudden change in ownership, market/brand focus, or overall community image."
  • "maintain the integrity of the dealer network and continue have a favorable mix of high performing single and multiple location entities."

The following table is included in the memo outlining limitations per dealership group depending on how many total Kubota retail stores that state has:

Kubota-dealer-size-limitations.png

The policy additionally limits the number of total Kubota locations one ownership group can own to 50 nationwide. 

Kubota provided the following statement on the to Ag Equipment Intelligence on May 14:

Kubota Tractor Corporation continuously evaluates its dealer network to ensure Kubota dealers are positioned as the local dealer of choice in every community by providing the best product selection, pricing, and overall experience for existing and prospective Kubota customers. To foster healthy competition in the industry, Kubota is in favor of a balanced approach which allows for managed growth by dealer owners, while also requiring reasonable limits on the concentration of ownership at a state level. Our dealers will be the first to learn of any further developments on this matter.

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