You can also listen to the interview in the audio version.
The Brno-based tractor manufacturer Zetor is experiencing a significant period. On the one hand, the company is under financial pressure from rising costs, loss-making operations and an unfavorable exchange rate of the koruna. On the other hand, however, after many years, it is planning the production of a completely new tractor model, launching plans for the production of an electric model and preparing the production of the Gerlach armored car in cooperation with its sister company.
“Just like all other manufacturers, we are affected by inflation and price increases. As an end manufacturer, we cannot react flexibly enough to the increase in the price of materials,” Róbert Harman, executive director and member of the board of directors of Zetor Tractors, described in an interview for SZ Byznys.
This situation had an impact on the management of the company. He reported a loss of 103 million crowns for 2022. Last year, the company had a net profit of 202 million crowns.
“For this year, in terms of economic results, we should get somewhere close to zero. Next year, we want to gradually make a profit,” added the head of Zetor. Part of the unfavorable development is also the waning willingness of farmers to purchase new machines.
“At the moment, we are seeing a decrease in demand for tractors. The main reason is high interest rates. Therefore, farmers consider investments very much. They mostly buy tractors on installments and the interest is high,” said Harman.
To add to the negative effects, the strong exchange rate of the crown against the Polish zloty was added. At the same time, Poland has been an important outlet for domestic tractors.
Zetor reacted to the confluence of unpleasant factors already last year. “Already at the end of last year, we set the company’s costs to an absolute minimum. We anticipated the crisis, we prepared for the situation,” said the head of the company.
Return to India
Despite the challenging situation on the agricultural machinery market, domestic Zetor plans to significantly strengthen its business. For example, he wants to focus on exports.
“In March, we signed an agreement with an Indian partner to create a joint venture. For the past two years, we have been jointly developing a tractor for the Indian market. We will start production in the coming weeks. We plan to produce and sell six thousand tractors in the Indian market within five years,” Harman said in an interview.
Zetor already exported tractors to India in the 1970s. “The brand is very well known there,” added the manager.
The current branch was established by Zetor in India ten years ago. The market there is one of the largest markets for tractors in the world. Last year alone, around one million were sold there. In addition to the territorial expansion of the business, Zetor is also working on the fundamental reward of the offer. It will launch a completely new tractor model on the market. A company has not come up with something like this since the decade before last.
“It is a new tractor model developed from scratch. This means that it will not be based on the concept of old tractors. The plan to start mass production is August next year,” explained Zetor’s executive director.
60 electric horses
The company invested around 100 million crowns in the development of the new model. The new model, meeting trends in the digitalization of agricultural business, is intended to serve a wider portfolio of customers than the current tractors coming off the lines of the Brno plant. However, in addition to the new model with the expected start of production next year, Zetor also started working on an electric model.
“We are launching a project for an electric tractor with a power of up to 60 horsepower,” noted Zetor’s director.
For now, however, due to the insufficient capacity of the available batteries, it will not be a tractor for the field, but mainly for lighter work. The electric model is still in the feasibility study phase.
In addition to the new tractors, Zetor, together with its sister company Zetor Engineering, continues to prepare the production of the Gerlach armored army vehicle. “We plan to manufacture these vehicles directly in Zetor in Brno. The start of production could be in the course of next year or in 2025. If there are orders, it could be as early as next year,” explained Zetoru boss Harman. The production capacity should be around 300 armored vehicles per year.
You can listen to the entire interview in the introductory video.
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Tags: tractor armored car dream Indian market Zetor reacts poor business-