Feasibility of a Terms Bank for Small Horsepower Tractors
Colin Peterson, Snoqualmie, WA, defended his thesis, “Feasibility of a Terms Bank for Small Horsepower Tractors” on April 2, 2015. He is a spring graduate from Kansas State University with a Master of Agribusiness (MAB) degree.
In the U.S., agricultural equipment is a competitive industry with a limited number of major players. Equipment manufacturers continue to look for opportunities to retain and gain market share.
“To be more competitive, our company is looking at industry best practices to see how we can increase market share. One idea that may be an option is a terms bank that allows dealers to carryover unused months of terms to be used at a later date on tractors with expired terms that are still in inventory and lower the interest they pay,” Peterson said.
By evaluating factors associated with stocking inventory, specifically interest rates, agricultural equipment manufacturers can help manage dealer inventory costs and stocking levels. Peterson’s thesis analyzed stocking unit costs and the effect on the dealership to examine the potential for a terms bank to lower interest rates and increase revenues for dealers and manufacturers.
Dr. Allen Featherstone, Professor of Agricultural Economics and Peterson’s thesis advisor, said, “The cost of managing can be very expensive in the agricultural equipment industry due to the high value nature of the product. Mr. Peterson provided useful analysis for his company as they consider ways to work with their dealer network to have inventory available at their retail outlets.”