Daedong and Türkiye’s Aral Group sign a KRW 350 billion supply contract for tractors
- Daedong to supply tractors in the 20~140 horsepower range from 2024~2028... Company enters the Türkiye tractor market with an annual capacity of 68,000 units
-. Local market outlook is bright due to the government’s strengthening of environmental regulations and increased subsidies aimed at replacing old tractors
-. Daedong is expected to supply Stage V-certified tractors... Targeting 3% local market share within three years with excellent offerings that are competitive in terms of price and product features
Daedong is setting up a strong foundation to make a push in the Middle East and African markets, focusing first on Türkiye.
Daedong Group's future ag-tech platform subsidiary Daedong (Co-CEOs Kim Jun-Sik and Won Yu-hyun) announced on December 19 that it signed a contract to supply tractors (20 to 140 horsepower) worth approximately KRW 350 billion over five years from January 2024 to December 2028 with Türkiye’s Aral Group (CEO Ahmet Cetin). The contract is equivalent to approximately 24% of last year's sales.
Türkiye is the world's fourth largest tractor market (as a single market), behind only India, North America, and China. The market is growing rapidly, increasing by roughly 25% from about 54,000 units in 2020 to about 68,000 units in 2022, of which mid- to large-sized tractors between 61 to 140 horsepower account for approximately 70% of all sales. The country has 20 or so tractor brands, including local agricultural machinery manufacturers in Türkiye and multinational agricultural machinery manufacturers from Japan, Europe, and the United States, competing fiercely for a slice of the market. Meanwhile, Stage III-certified tractors under Europe’s exhaust gas emission standard, are currently available for sale locally. However, changes in the market are expected from the second half of 2024 as tractors are now required to meet Stage V standards, which is two stages above the current certification requirement. As part of a rural modernization initiative, the Türkiye government is increasing the size of tractor subsidies from TRY 24 billion (KRW 1.1 trillion) in 2021 to TRY 54 billion (KRW 2.4 trillion) in 2023 to replace 2 million old tractors that are over 20 years old.
Aral Group was established in 1995 and is engaged in the construction and imported car distribution business in both Türkiye and Azerbaijan. The company is looking to make agricultural machinery, which has a bright future, as part of its core future business, and signed a contract with Daedong in hopes of distributing KIOTI products, which are doing well in North America and Europe, Türkiye’s local market. Daedong will supply Stage V-certified tractors in the 20 to 140 horsepower range, which it already sells in Europe, to Aral Group from the first half of next year. The company believes that it will be able to quickly penetrate the market due in large part to highly competitive prices and great power output, and plans to cooperate with Aral Group in various aspects such as marketing, services, and product development. The goal is to build a local dealer network featuring 30 to 40 dealerships within three years, and secure a market share of at least 3%. Daedong is looking to sell more than 3,000 tractors by 2028.