To keep pace with the fast-changing agriculture industry and increasing acreage of farm holdings, the legendary McCormick tractor manufacturer has been adapting and innovating its offering in the past five years. The company leveraged long-time tractor financing partner DLL to complete their competitive farm equipment package by offering custom financing options for their dealers and customers. This partnership has resulted in an all-in-one solution and value proposition that is helping McCormick increase dealer sales and improve its bottom line.
Tractor financing builds an all-in-one competitive advantage for vendorsIndustry: Agriculture
Having an in-house suite of retail and wholesale financing solutions to offer our dealers and customers has been indispensable in helping us successfully distribute and retail our products in a highly competitive market."
The tractor that industrialized the United States
Born in Virginia in 1831, the McCormick brand became known for producing the tractor that industrialized the United States. Today this legendary brand continues to break new ground in tractors that are known for their exceptional quality, technology and efficiency. McCormick North America has built an expansive network of more than 200 tractor dealers to serve farmers in a variety of agricultural applications. Since 2001, the company has partnered with DLL to offer dealer financing and tractor leasing.
Market expansion leads to new challenges
To meet changing market dynamics, McCormick North America has been making a shift in the past five years from selling smaller, less expensive tractors to their new X7 and X8 series of larger, higher horsepower tractors. The new tractor can cost up to $350,000, driving more demand for financing options. Higher price points and financing options have increased the complexity of the purchasing process for farmers and tractor dealers—presenting a challenge to McCormick.
This pivot in product strategy meant that McCormick and DLL would need to pivot their financing strategy. A new strategy would be needed to drive adoption and implementation among their dealers, for both the new products and the new financing options to support the larger and more expensive equipment. At the same time, resources and training were necessary to help the dealers onboard and sell the new equipment with financing, which had previously not been a leading element of their sales message. “Thanks to our strong collaboration with DLL, we felt confident taking on this challenge,” says Tiago Bonomo, CEO and President, McCormick North America. “The common denominator between DLL and McCormick is making the business stronger and profitable for both companies.”
Delivering all-in-one solutions at the point-of-sale
DLL took a proactive approach in planning and ideating financial and training strategies for McCormick’s dealers. “DLL committed to supporting us in our change of direction and provided tailored solutions to support the sale of our new products,” says Bonomo. McCormick and DLL began by developing a new financing strategy aligned with the new product goals. In addition to customized financing for the new product launch, McCormick was offering all of DLL’s tailored financial solutions through the McCormick Credit brand. It allows farmers to get their equipment and financing all-in-one from McCormick dealers, versus having to secure their own financing separately.
Bonomo: “If I present the financial offer as an integrated part of our product offering, everything connects and everything makes sense to our customers. They feel that we are taking all the necessary steps to make their lives easier and better.”
“Having an in-house suite of retail and wholesale financing solutions to offer our dealers and customers has been indispensable in helping us successfully distribute and retail our products in a highly competitive market,” says Bonomo. McCormick’s dealers can offer competitive retail finance solutions to their customers, from tractor loans to tractor leasing, with low rates and a variety of payment structures, which strengthens their customer loyalty. And customers benefit from the convenience and value of getting the best equipment and best financial solution as a package deal. Bonomo: “All of this builds real confidence and trust with our dealers and customers.”
Capping risk with dealer financing programs
To address the increased financial risk for McCormick dealers, DLL offered floor planning financing programs also known as inventory financing to McCormick dealers. “This supports our dealers in stocking a wide range of our products in their showrooms, and gives them flexibility to deal with the volatility of the market from time to time,” says Bonomo. DLL was also able to develop a custom solution for used equipment financing to cover the large inventory of used tractors with McCormick’s dealers.
Stephanie Haezebroeck, DLL Program Manager says, “Everyone works as one unit to help move McCormick’s initiatives forward, from providing their dealers with quotes to educating them and supporting them in selling finance options. From a wholesale standpoint, our account managers work with McCormick Credit to offer dealers a way to purchase the equipment for their lot which puts them in a strong sales position.”
Dealer growth through financial options
The new product launch and financing combination is working. Bonomo: “There is a new generation of dealers that want financing options. The dealers that are growing and are more successful are the ones using the financial tools. In fact, the leasing program is responsible for 80% of our X7 sales, alone.”
McCormick sees the value of taking a joint approach and building their marketing strategy together with DLL. Bonomo: “The process is much more efficient and our results are much more evident and positive when we have DLL onboard to approach the market with us.”
The dealers that are growing and are more successful are the ones using the financial tools. In fact, the leasing program is responsible for 80% of our X7 sales, alone."
Building on trust and stability
As the agriculture business continues to evolve, McCormick and DLL adapt and change their approach as needed. Bonomo: “The big advantage we have with DLL is they are always open to hearing our challenges and developing new solutions to meet our real-time needs as they arise. They provide the flexibility and tailored solutions that dovetail with our changing business strategy.”
Bonomo: “DLL takes a long-term view of partnership, based on trust and stability, and that is the kind of partnership we like to invest our time and efforts into. Having a partner that can help educate and inform us on the marketplace trends, how rates are moving and what to expect for the future – all of that is very beneficial. DLL is also our risk filter for our business. We know that DLL has experience and knows how to evaluate risk, credit and performance. This is a huge value for us.”
In the future, Bonomo feels that leasing will become more and more important for its high horsepower tractors, and they will need to continue to develop creative solutions with DLL to address farmer needs. Bonomo: “It is no longer enough to just convince the customer that our tractor is the best fit for their needs. Even more important, we also need to explain that we have the best financial solutions in place to meet their needs.”
Learn more about DLL’s agriculture financing solutions for vendors, go now.