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Power shift

AGCO Corporation’s late-December acquisition of the Caterpillar Challenger line left many people amazed, dazed, giddy and somewhat confused. To be sure, more than a month after the announcement, both sides remained secretive about details of exactly how the deal would affect their customers and dealers. Not surprisingly, speculation and rumors filled the void: Was this Cat’s first step toward getting out of the ag equipment business? Why did AGCO want these expensive track tractors anyway?

By mid-January the rumor killing was under way. Meetings between AGCO and Cat dealers laid out a vision, if not a rock-solid certainty, for the Caterpillar dealers’ future in agriculture.

More than tractors. Although the initial announcement in December dealt primarily with AGCO’s acquisition of the Challenger MT700 and MT800 series track tractors, it turns out AGCO is getting more than just tractors. In fact, AGCO also owns the rights to the Challenger brand name, including access to the network of Cat dealers. If all goes as planned and Cat dealers like what they hear from AGCO, the company will leverage the Challenger brand and the Cat dealer network to reach the coveted top tier of high-acreage farm equipment buyers.

According to Dennis Heinecke, vice president, Challenger/AGCO tractors, not only will Cat dealers continue to sell Challenger track tractors, they also might tap AGCO’s existing inventory to expand their product line with a portfolio of Challenger-branded wheel tractors, combines and hay equipment. Heinecke says exactly which AGCO products will get new yellow paint and additional premium features depends in part on dealer interest.

Dealers’ response. Though few contracts have been signed yet, Cat dealers seem optimistic about their future with AGCO. Rae Kurth, ag business manager with the Ziegler Cat dealership in Minnesota and Iowa, says that though he and many other dealers were initially frustrated by how the buyout announcement was handled, he now thinks the deal will ultimately result in expanded offerings for his ag customers.

"While agriculture has not been a huge percentage of our equipment business, most of us look at our ag business as something with good growth potential," Kurth says. "We’ve been hearing from our customers that they’ve wanted us to carry more equipment, and they’ve already responded favorably to our addition of Caterpillar-branded Krause tillage equipment last year. Now it looks like we’ll be able to meet even more of their equipment needs."

Despite change at the corporate level, customers in the field seem committed to their dealers. Kurth says his dealership sold two Lexion combines soon after the buyout announcement. And he thinks that loyalty should grow with a product line that could include Challenger wheel tractors and a variety of re-branded AGCO machines.

Challenger’s future. Though specifics on the new Challenger brand lineup are not yet available, Heinecke did share a vision of what could be in the near future. "We’ve already shown dealers prototype machines with a ‘Cat powered’ logo on the side and an AGCO logo on the front grill. Everyone seemed to approve. And many were especially enthusiastic at the unveiling of the MT865. At 500 hp, it will be the highest-powered production tractor on the market. In areas where Cat dealers decide not to carry Challenger equipment, AGCO may sell the Challenger line through non-Cat dealers as well."

Heinecke says customers could get their first look at some new full-featured Challenger-branded machines at February’s Tulare Farm Show in California and Louisville’s National Farm Machinery Show.

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