AGCO wants to invest in South Africa
RYK VAN NIEKERK: AGCO, a Fortune 500 group, has established a two-tier distribution model at SA. We are developing a network of dealers to support the Fent brand, one of the most technologically advanced agricultural machinery brands in the world.
This two-tier model aims to increase dealer profitability and goes beyond AGCO’s current dealer partners to investors who understand Fendt brand engineering acquisition, innovation implementation, and service leadership. It extends to.
Felix Seitz, Head of Sales for AGCO Africa, has joined. Felix, thank you for joining us.Please tell us about this investment opportunityFelix Seitz: Ryk, thank you for bringing me first. Let me tell you a little bit about this opportunity. We at AGCO have already entered the market here in South Africa for many years. A few years ago, we launched one of our brands on the market. It is our, for example, the most famous and most technical brand, the Fendt brand.
Over the past few years we have been selling this brand through third parties, but it’s time to make some changes. So, in a new approach to distribution here in South Africa, we decided to adopt this route using the Fendt brand.
So, specifically, South Africa’s AGCO Africa is changing its distribution model. We are migrating from the Tier 3 model to the Tier 2 model.
So, in fact, we’re eliminating intermediaries.
So, as a distributor and manufacturer, we play this role. This is clearly a very important reason in a more competitive market than ever before. We feel the need to help dealers become more profitable and move to such, well, thinner distribution models. I think you can deal with this topic fairly well.
RYK VAN NIEKERK: Therefore, it is a much flatter distribution model than other major suppliers. Felix, what type of dealer are you looking for, and what are your potential capital investments?
Felix Seitz: We are looking for a partner who understands our brand. As I mentioned earlier, the Fendt brand is the most famous brand, the high-tech brand, and I think it is very innovative and valuable. So understand what this brand represents, as we do globally, and what they need to offer to fulfill the Fent promises we want to keep. I need a potential partner to do.
When it comes to investment assets, it depends heavily on the business settings. Therefore, the possible scenarios are very different. Looking at the preferred scenario in the perfect world, you have an independent Fendt dealer who just sells its products to the market on behalf of the brand. In South Africa, which just introduced the brand in 2017, this can be quite difficult as it is still out of a fairly small footprint.
Therefore, it will take a considerable amount of time for such dealers to make a profit. Then there are other settings, such as joining another dealer in a joint venture. For example, an entrepreneur or investment company with an existing dealer. They have the potential to form an entity.
Take this opportunity for competitive dealers as well.
Why if you could separate your business from the competitive businesses they already own? It’s completely possible. And obviously, don’t forget our own dealer network we already have here, the Massey Ferguson dealer network. They are also invited to participate.
Therefore, each setup has different investment requirements. But when you look at the brand in general, what it represents, and the type of equipment it carries, it’s clear that it requires a significant investment. we [are] We will only talk about high value equipment. We are clearly looking at infrastructure needs. They need to be appropriate to represent the brand. In particular, we also focus on staff who need to be well trained with the right knowledge. Appropriate skill set. They have to concentrate on everything else. And we look at the after-sales aspect of the business. From workshops to service vehicles to special tools. You need to get them.
And most importantly, if the dealer wants to play his part, that is, if he is properly devoted to the farmer, he needs to have the right amount of spare parts in stock on the premises to keep enough in stock. There is. After all, if he has nothing on the floor, he can’t sell anything. So, when you put them all together, there’s obviously a huge investment requirement, but I don’t want to put a number against it because it really depends on the situation, all the potential candidates.
RYK VAN NIEKERK: Now, the key to the success of such dealers will be the demand from farmers. Fent is currently the best international brand, are there any signs? [what] Is the demand for the product?
Felix Seitz: I think there is demand. We have excellent products. As I said, Fent is considered a leader in innovation, a leader in technology in this world. Looking at the economic situation itself and agriculture, the industry is becoming more competitive year by year. This is clearly affected by many different factors, but whether it’s politics or climate, the windows of certain applications are getting shorter and shorter.
And for farmers, especially large commercial and professional farmers, it is more important to have reliable and highly efficient products.
This is where the Fendt brand comes into play. We are confident that the Fendt brand is not only highly needed, but also sought after by the agricultural community, due to its engineering mastery and service leadership. Therefore, it ends with a service promise to penetrate the new dealer network, from the quality of the build to the advanced technology that accompanies it.
Therefore, to be more effective, you need to have the right product with the right technology. The Fendt brand covers and thinks it has some unique sales offers that no one else has.
And it starts with our product itself, the transmission, the first variable transmission developed in the world. Nothing beats this transmission. It is passed to the tractor management system, which is an engine and transmission assistant. The system automatically controls engine speed and transmission settings, so the operator does not have to do anything. Highly intelligent software basically determines to the operator the speed at which the tractor must move to reach maximum efficiency.
We have the so-called Fent ID concept. This is nothing but high torque and low engine speed.
As a result, our tractors produce the highest torque at very low speeds. This is also efficient.
You bring power to the ground much more economically. It is easy to see that fuel consumption is significantly lower when covering a large area compared to other brands.And obviously, looking at the service life of the machine, the RPM is low. [revolutions per minute], Suitable for engines.
Maybe another example-our very famous Fendt Vario drive is variable four-wheel drive and doesn’t exist in other brands with four-wheel drive, fixed torque ratio-and with us it’s variable is. Therefore, wherever the tractor needs power, whether on the front or rear axle, power is directed to this axle. Again, it’s efficiency, bringing the best possible power to the ground, thereby covering more areas more efficiently, saving fuel, and so on. And there are other examples I can continue with, but these are some really unique sales offers that, as the terminology says, make our brand unique.
RYK VAN NIEKERK: Would you like to offer the full amount in South Africa?
Felix Seitz: No. In Europe, the Fendt brand was converted to a full liner some time ago.
We in South Africa started with a lineup of two-wheeled tractors four years ago. Expand this product portfolio and certainly increase dealer profitability.
So, this year, I introduced the idea of Fent, which is a large-capacity combine harvester. Next year, we will continue to introduce a new generation of tractors and the very famous Momentum widespan planter.
As a result, our product portfolio is expanding. As we build over the next few years, with the new dealer network, these are the original products and already cover most of the commercial agriculture segment.
RYK VAN NIEKERK: How many dealers are you trying to set up?
Felix Seitz: We obviously need to cover the whole country in the most important areas where Fent products are needed. Perhaps it consists of two phases.
The first phase will run until the end of the year with the goal of appointing at least four dealers, perhaps five.
And the rest will continue next year. At this point, I predict a total of about 10, up to 12 partners nationwide, remembering that partners may obviously own multiple stores.
It depends on the area. It depends on the approach and investment capacity.
RYK VAN NIEKERK: Where can potential investors and stakeholders get more information?
Felix Seitz: It’s that easy. The website www.fendtdealer.co.za has been opened. If you are interested, please call the website and be interested. We welcome your feedback from anyone interested in becoming a Fendt dealer. Therefore, please submit with interest to everyone.
RYK VAN NIEKERK: Felix, thank you very much for today. That was Felix Seitz, the sales manager for AGCO Africa.
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AGCO wants to invest in South Africa
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