The equipment market isn’t moving in one direction.
Agricultural OEMs are navigating what some have called the deepest trough in more than a decade, while power generation demand — particularly tied to data center expansion — is expanding rapidly. Tariffs are no longer viewed as a temporary disruption but as embedded cost variables, and commodity price volatility continues to influence capital decisions. Infrastructure spending adds further complexity, supporting some segments while leaving others exposed.
As Nate Chenenko noted during a recent Association of Equipment Distributors webinar with Ducker Carlisle and Syncron, depending on the day you look at the headlines, you can get “a wildly different picture of what is going on in the market.”
In reality, all those different pictures are true at the same time.
1. A Deeper Agricultural Cycle
Leadership teams across the ag sector have been candid about the current environment. Tractor demand in key categories has fallen to levels not seen in well over a decade, and global agricultural equipment forecasts remain under pressure.
As Chenenko observed during the discussion, “the depth of that trough is pretty startling.”
What’s notable is that earnings guidance has largely been reaffirmed rather than cut dramatically, signalling that the contraction, while severe, is not unexpected.
For dealers, that places more weight on the installed base. When new equipment demand slows, aftermarket performance stops being a buffer and becomes the primary revenue engine.
2. Tariffs as Structural Cost Drivers
Tariffs no longer feel episodic. They sit inside the operating model.
As Ben Groeneveld described during the session, uncertainty remains the “overarching message.” Not whether tariffs exist, but how they ultimately settle — by geography, by component, by trade agreement. Several OEM leaders have acknowledged they may not yet see the full downstream impact across their supply chains.
Recent legal developments have only added to that complexity. In February 2026, the U.S. Supreme Court ruled that a large swath of emergency-authority tariffs lacked proper legal basis, prompting renewed debate about how trade policy will ultimately be structured.
For manufacturers and dealers, the challenge isn’t simply higher input costs; it’s the breadth of possible outcomes. Sourcing strategies, inventory positioning and capital planning are being evaluated against multiple scenarios rather than a single assumed baseline.
3. Power Generation’s Acceleration
While agricultural demand softens, power generation is expanding quickly, driven largely by concentrated investment in AI infrastructure and data center capacity.
Electricity demand from data centres is expected to rise significantly over the next decade — more than doubling from today’s levels, with global consumption projected to reach around 945 TWh by 2030 according to the IEA. Some OEMs have already reported year-over-year power generation sales growth exceeding 30% in segments tied to data center demand. For example, Caterpillar’s Energy & Transportation unit saw power generation sales jump roughly 31% in its Q3 2025 reporting.
While some view it as a lasting structural shift, others question how long the pace can hold. But as Chenenko noted, whether this proves to be a boom or “more like a bubble,” the machines being deployed today will require maintenance, parts and service long after the initial growth phase slows.
As Groeneveld put it, even in a moderation scenario, “you’ve created all those new customers.”
4. Commodity Volatility and Capital Discipline
Crop prices have moved sharply lower.
Corn that once topped $7 per bushel is closer to $4 — down roughly 40%. While soybean exports have received a bump based on the US-China trade truce, prices face downward pressure from a large Brazilian harvest and, in some regions, producers are questioning whether it makes sense to plant at all.
That pressure carries through the equipment ecosystem quickly, with many farmers lacking the confidence or capital to invest in new machinery — particularly when equipment prices remain elevated relative to historical norms.
5. Government Influence — Uneven but Material
Government policy is shaping demand in two different ways.
In agriculture, relief programmes and income support mechanisms are acting as a stabilizing force, narrowing projected losses and keeping operations viable.
While these subsidies don’t recreate peak commodity pricing, they can shift behaviour at the margin, restoring enough confidence to keep planned investments on the table rather than being scrapped entirely.
In construction, the influence is different. Public infrastructure spending continues to support segments tied to roads, utilities and energy, even as residential activity softens. That spending isn’t evenly distributed, but where it lands, it creates tangible demand that offsets weakness elsewhere.
Drawing Your Own Line
Not every OEM is experiencing the same version of this market.
Some are looking at predominantly red indicators — declining unit volumes, aging fleets, tighter liquidity among customers. Others see more green — power generation growth, resilient segments, stronger order books.
As Chenenko framed it during the session, where you find yourself on that spectrum shapes what comes next.
If Your Lines Are Green
If your lines skew green, the conversation shifts toward revenue maximization.
In that context, many OEMs are moving toward more market-based parts pricing logic. Historically, many have relied on cost-plus models — layering margin on top of input costs. That approach becomes unstable when costs move unpredictably. Instead, some organizations are building SKU-level logic that incorporates competitive scoring and portfolio-wide margin targets. As Groeneveld put it, the goal isn’t to “hit everything with a hammer.” It’s to use a scalpel.
Lowering prices can feel counterintuitive for OEMs accustomed to protecting margin at all costs. But as fleets age and repurchase cycles stretch, retention pressure increases. A slightly lower price on certain service parts can protect channel loyalty and service revenue that would otherwise migrate to independent repair shops.
Service contracts follow a similar logic.
In a downturn, they can buffer machine sales volatility. In expansion periods, they can lock in future revenue. What’s changing is the level of customization customers expect. Coverage windows, usage profiles, ownership patterns — especially for second and third owners — rarely fit neatly into standard warranty templates. Structuring and pricing those agreements requires a clearer understanding of cost exposure and customer economics than in prior cycles.
If Your Lines Are Red
If your lines skew red, the focus shifts.
Cost takeout becomes central. Inventory may need to be rightsized, distribution models reconsidered, and internal warehousing practices scrutinized. In that environment, the question isn’t how to expand revenue; it’s how to preserve cash and reduce structural drag without compromising future competitiveness.
Managing Both at Once
Most organizations aren’t purely red or purely green. They’re managing both at once — expanding in one segment, contracting in another.
That’s what makes this cycle different.
The strategic lever you pull depends less on the headlines and more on where your exposure sits.
Watch the full discussion
These themes were explored in more depth during the recent AED session with Ducker Carlisle and Syncron. If you’re assessing where your organization sits across these five forces and how to respond without overcorrecting, you can watch the full AED webinar replay here.