CNH to Pull Back Production Amid Lower Demand & High Dealer Inventories

Third-quarter construction revenue dropped for CNH Industrial, which confirmed it would be pulling back equipment production as retail demand remains subdued.

The company recently said it tentatively planned to close its Case CE plant in Burlington, Iowa, in 2026, which was addressed in its recent earnings call (see comments at end of this story).

From its previous 2024 forecast of construction revenue down 15% to 20% year-over-year, CNH has revised that to being down 21% to 22%. CNH Industrial’s planned production pullback – brought down 13% year-over-year in Q4 for construction equipment – in order to manage channel and dealer inventories was cited as a major factor in the lower forecast.

CNH said this is necessary as the company forecasts continued weak demand in both its construction and agriculture markets.

CNH Industrial CEO Gerrit Marx said during the earnings call regarding the company’s overall dealer inventory, “Dealers continue working through their new and used inventory, which is above our target levels. We estimate dealer and new inventory is about $1 billion to $1.5 billion or around one to 1.5 months too high.

“While we reiterate that in the current market our primary lever for achieving channel inventory reductions is through lower production, we also took some focused pricing actions on specific subsets of inventory, that are directed at retail sales and dealer support for used sales in the coming months.”

The company brought in $687 million in construction revenue in its third quarter, down 28% from the $948 million it same in the same period last year. This was attributed to lower volumes driven mainly by a decrease in market demand across all CNH Industrial’s regions.

Speaking during the earnings call, CNH Industrial’s Chief Financial Officer Oddone Incisa also said the company’s lower construction volumes and pricing were offset in part by lower expenses due to lower material costs and improve manufacturing plant efficiencies.

Total revenue in the third quarter was down 22% year-over-year to $4.65 billion.

Comments on Burlington Factory Closure

When asked during the earnings call about CNH Industrial’s tentative plans to close its Burlington, Iowa, manufacturing plant and move production elsewhere in the U.S. and Europe, Marx said it was about improving the business and that there was a need for action.

“Well, look we are further improving the business,” said Marx. “It's part of our structure. There is a need for action. That decision has been very thoroughly prepared by the construction team for quite a while.

“And as I said, we are going to relocate the – just as an assembly plant, we're going to relocate those to existing CNH plants in the U.S. and Europe. And that these – this move is similar to other moves the construction team has done, and it is benefiting the business, and it is the right thing to do.”