By Tim Brannon posted on March 30, 2025 in Best Practices – Rural Lifestyle Dealer
Much has been written on dealership management about ‘Absorption’ or absorption rates. It is important, especially in these trying times of almost depression like sales for dealers and manufacturers. We have also been reading much about impending tariffs that might affect the farm implement business. The issue that caused the clapper to ring my bell are the recent emails from all our suppliers that have the same message: “There may be tariffs that might affect our costs, therefore we are announcing a 5% PRICE INCREASE that will occur in April.”
Let me get this straight in my thinking. We have billions of parts in stock across the country that are sitting, and some have been sitting for years, that are going up 5% in one day. There is a lead time on parts. How long does it take to unload a container, or air freight shipment that has to go to a packager or be put in inventory? When we need a part that is not in the country, we are told 2 weeks to a month unless we pay an extra fee and have one bypass the normal stocking process when a part is out of stock awaiting shelving. Would one say this is a windfall profit to the bottom line? I suggest it is a preemptive absorption move in tough times.