Issue link: https://read.dmtmag.com/i/236097
2014 Business Outlook Report ("A Prevailing View" continued from page 34) optimism and 78 percent said customers were going to be cautious and renting. This year 35 percent of dealers said customer mood is more ripe for purchasing, and 61 percent said the mood was cautious. On a departmental level, dealer responses reflect a pretty upbeat outlook on how the slightly shifting contractor mood might play out for them. Sixty percent look for modest uptick in new equipment sales in their markets; add another 10 percent who think the increase will exceed 10 percent year over year and it's a solid majority who are bullish for strong new machine sales in 2014. For used equipment sales, slightly more than half expect a moderate increase, and close to 10 percent say they'll do more than 10 percent better than 2013. Just under half of dealers think a 1 to 10 percent increase in rental revenue is doable this year, and another 22 percent say increases will go higher than 10 percent. An even two-thirds predict modest parts sales increase and 11 percent forecast better than 10 percent higher over 2013. Sixty-six percent predict 1-10 percent gains in service business sales with 8 percent more saying their service revenues will increase by more than 10 percent. For used equipment, rental, parts and service, an almost perfectly consistent quarter of the survey-takers are banking on flat results for 2014. And 17 percent say their new equipment sales are going to be the same as 2013. This year, a few more dealers say they're thinking about taking on a new product line compared to last year's survey. While an obvious two-thirds majority are not looking to add to their offering mix, about 6 percent more than last year say it's a possibility – two write-in comments indicated interest in Chinese lines, Says Who? Executives from a wide swath of dealership types responded to this year's Business Outlook Survey, but looking at majorities of certain responses, the following generalizations can be made about CED's survey-takers: A majority (33 percent) employ 21-50 people and operate 1-3 locations (52 percent) and 40 percent have 4-10 branches. A majority (51 percent) are heavy equipment dealers/100 hp and above; 34 percent are medium equipment dealers/under 100 hp; 10 percent are specialized dealers, including engine, forestry, ag, industrial, mining and concrete equipment; and 4 percent are primarily rental companies. The largest respondent group by annual revenue (27 percent) is the $26 million to $50 million category; 23 percent of survey-takers estimate their 2013 revenues between $11 million and $25 million; 16 percent – $51 million to $100 million; 17 percent – $101 million to $300 million. Small percentages have annual revenues below $10 million or above $300 million. and another said it's just got to be something compatible with existing products. 2013 Wrap-Up Although anecdotally you still hear an occasional dealer say they had a record year – even among nonshale play suppliers, believe it or not. However, year-end total dealership revenues on the whole were just ok – a little bit good (35 percent), a littler bit great (23 percent) and the rest just flat (23 percent) to down (17 percent). Most are happy with where their Q4 '13 inventory levels landed – but the fact that 40 percent were not satisfied with their year-end inventories is not inconsequential. We detect some passion on the subject when 13 surveytakers pause to make a comment, and nine said they had too much inventory. Even so, a trace of OEM product availability issues still remains for a sizeable group. Nearly a third say there's been no change, but almost 20 percent allude to a worsened rather than improved situation. But the combined positives tally up to more 38 | www.cedmag.com | Construction Equipment Distribution | January 2014 than 50 percent whose availability kinks are getting smoothed out. Where Does It Hurt? Some AED members are getting weary of complaining about the government's ill effects on business; nevertheless, it's hard to ignore the five major clouds rolling across the industry horizon with threatening speed, size and hue. CED asked survey-takers to rank the challenges that are converging in 2014 and here's what we heard: Adapting to and counseling customers through the official jump to Tier-4 Final came in as dealers' No. 1 concern. A close second among the most dreaded challenges: Dealer tax exposure in 2014 and 2015 due to the expiration of Bonus Depreciation and Section 179 expensing, as well as possible extinction of LIFO and LKE provisions in the tax code foretold in the Senate Finance Committee's draft tax reform legislation. (continued on page 40)