Interview with Tony Brown, National Sales Manager, Kioti Tractor

Years of Experience

“KIOTI Tractor is a division of Daedong Industrial-USA, a subsidiary of Daedong Industrial Co. of Daegu, South Korea, which began engineering and designing farm equipment over 50 years ago and specializes today in compact tractors, attachments and implements.

“KIOTI Tractor of Wendell, N.C. began marketing these tractors and implements in North America in 1986. Since that time we’ve made many enhancements and additions to our tractor line, celebrating our 20th year in business 2007.

“Since 1986, KIOTI has gained rapid market share due to our willingness to accept feedback from the field and adapt our products to the changing needs of our customers.

“Our current network of over 250 dealers along with our fulfillment centers in Wendell, N.C., and Mexia, Texas, provide our customers with streamlined parts ordering and local service support.”

The Market is Changing

“We make more than 30 different tractor models in the 22-90 horsepower range. The tractor line is complemented by 8 loader models, 3 backhoe models and a variety of attachments, implements and accessories. We’re strategically targeting horsepower segments and end-user applications such as small-crop production, nurseries and hobby farmers. The 30-40-horsepower cell is where we see the greatest opportunity for KIOTI to gain market share.

“Today’s consumer is very different from the consumer we dealt with several years ago. Today we’re getting back to what originally drove the tractor market, the traditional hobby farmer. We’re seeing more cash buyers, which means we’re selling to financially stable consumers who rely heavily on their assets, rather than live paycheck to paycheck. Sales to the large-property owner segment have experienced the biggest hiccup since 2006-07.

“We’re almost having to treat every transaction as a unit in itself. Visibility is the key for us, as well as being prepared to react as needed.”

Incentives: A Function of Selling

“Consumers are more savvy today and more critical of where they choose to invest their money. Buying a tractor is an investment. It’s not like a car where, when they change the design and you buy the next one. It’s a long-term investment and a planned purchase. They have their resources and want to make the best purchasing decision they can. KIOTI’s sales and finance programs give us the flexibility to meet each customer’s needs.

“Everybody is offering competitive sales and finance programs, and it’s very costly for any manufacturer to offer them. To remain competitive in the market place, they’re a tool that we must provide to our dealers. We’ve gained market share in the last quarter despite the sluggish economy by offering aggressive programs.

“With dealer programs, we need to maintain a healthy and fully engaged dealer body, which means we must continue to offer competitive programs, thereby putting dealers in a position of strength as they mature and grow. The programs KIOTI offers change every year. The market is still in state of flux and the old formula doesn’t always work. Every dealer is different and we try to have different options available to meet their needs.”

No Big Box Stores

“We haven’t aligned ourselves with any chain or big box stores. Doing so wouldn’t and doesn’t lend itself to our position in the marketplace. We’re a company that relies on relationships, and the ability to do the right thing every time. Dealers are our conduit to the end users and we must nurture that relationship so the end user is satisfied.

“When you go to a big box store, the retailer essentially disengages themselves after the transaction is made, and the brand sold through that store must survive on its own. Providing service to customers after the sale is what continues to move us forward.

“One thing our dealers recognize is that this is a partnership. We want to grow a partnership with dealers who provide parts, service and sales support to their end user customers. Our dealer network is critical to our success.”

Independence is Key

“We manufacture our entire tractor. We outsource very little and handle our own assembly. We make our own engines, drive trains and transmissions. We’re a full-source manufacturer and supplier. We don’t have to answer to any other vendors or meet their expectations, which means we set our own course and control our destiny. We know the quality of each and every component that goes into our tractor, which allows us to offer one of the industry’s leading warranties.

“Other manufacturers that enter the market may have a team from a distant country, so it takes them longer to become familiar with the market and how to react to what the market needs. We already have a foothold here and know how to manage and prepare for it.

“Our name recognition improves every year. Frequently you’ll hear some manufacturers say it’s the logo or the name, but as far as KIOTI is concerned it’s our brand and our legacy.”

Tony Brown, National Sales Manager, Kioti Tractors

Don’t Dilute the Image

“We will continue to add implements and other products to our lineup. Some are manufactured by Daedong Industrial Co., others through approved vendors. We’ve expanded our 3-point hitch offerings, ground-engaging tools, maintenance equipment and lifting tools.

“There’s nothing worse than seeing a blue implement on the back of an orange tractor. When you start hanging other products off your brand, it dilutes the image. Providing our own line of implements and attachments gives our dealers the chance to be a sole source for a customer’s product needs, so they don’t have to go somewhere else.”

The Criteria for Dealers

“One dealer criteria we have is that an owner is fully engaged in the operation of the business, vs. a stockholder group that is managing it from the outside. “Brand loyalty is another one. Quite often we see dealers with four different tractor lines, and my personal view is that you don’t sell four times as many tractors with four times as many lines.

“Establishing brand loyalty has proven to be far more successful for our dealers. To have 3 brands all offering 30-horsepower tractors doesn’t do a dealer justice. In some areas it poses a problem. It’s not rampant, but single-source dealers are typically our best dealers.”

What Dealers Must Do

“This industry has a lot of well-seasoned dealers who’ve been in the business a long time. But they’ve done business through a legal pad and microfiche systems, and as the business model matures, business management systems will be crucial for being able to do business electronically with all vendors that are out there.

“End users are driving this need, too. The need to be more reactive and responsive to customers is driving us all to improve our processes and systems. The tractor business is essentially 10-15 years behind the auto industry in this area.

“The auto industry realized that the absorption rate, and paying bills through parts and service is the key. Equipment dealers are now following suit and trying to find way to be more profitable with things like parts-buying programs. We’re trying to help them improve their parts programs to improve margins.”

Won’t Be Victim of Consolidation

“More consolidation would make sense based on the recent fallout we’ve seen. I can’t say specifically who. The relationship between Shibaura and New Holland has changed, you’ve seen what’s happened with Montana, and CNH is being separated as its own business unit.

“Things are changing, for better or worse, and we must all find ways to maintain profitable businesses in these times. One advantage we have is that we’re a sole source of products from foundry to dealership. We’re not heavily reliant on any other supplier, which gives us a competitive advantage.”

Pockets of Growth

“KIOTI is optimistic. According to industry numbers, the marketplace is on a slow incline. Consumer confidence is where we’ll see the greatest opportunity, if we can keep up the positive momentum. We’re all coming up against the Tier IV deadline, so manufacturers are trying to determine the best strategy.

“As a whole, we’re not seeing a smooth transition forward. We’re seeing some pockets of growth and some areas that are stagnant. But we’re positioning ourselves for continued success. Our new UTV is something our dealers are looking forward to. They are very encouraged by the ride-and-drives we’ve had. The outlook for the MECHRON is very positive and it should be in our dealers’ hands in the very near future.

“KIOTI has gained market share each and every year since our start in North America. We want to be a market leader through innovation and continue to be a player in the 30- to 40-horsepower market. With the backing of our parent company, Daedong, we have limitless opportunities for continued growth in North America and as a global leader.”