Daedong Corp., South Korea’s leading tractor and farm machinery maker, has ended its two-decade-long partnership with Deere & Co., the world’s largest maker of farming machines sold under the John Deere brand.
Industry sources said on Tuesday that Deere notified Daedong of its decision to stop supplying medium-to-large-sized tractors to the Korean firm in December.
A Daedong official confirmed that the two sides have agreed to end their partnership.
Daedong, dubbed the Korean Tesla of the agricultural machinery industry, signed a business partnership with the US farming machine giant in 2004.
“We have been actively selling our own large tractor models, such as the HX series with 100 horsepower and above, since 2021. We believe these models are competitive enough to end our contract with John Deere.”
Daedong has been expanding its product lineup to include medium-to-large-sized tractors – traditionally Deere’s main focus – reducing the need for collaboration, sources said.
SEEKING ANOTHER PARTNERSHIP
Listed on Korea’s main Kospi bourse, Daedong unveiled its vision of becoming a leading futuristic agricultural machine maker in 2020, expanding its business scope beyond smaller tractors.
Last year, it diversified its lineup by launching the 20-to-60 horsepower GX series of mid-sized tractors, which are at least 20% more profitable than smaller ones.
“Before launching the HX series, John Deere tractors accounted for 20% of our sales, but the percentage dropped to 10% last year, meaning our separation with Deere won’t affect our revenue much,” said the Daedong official.
“We are also considering a partnership with another global agricultural machinery company to secure a product lineup above 150 horsepower, which we don’t currently manufacture in-house,” he said.
Founded in 1947, Daedong makes tractors, combines, power tillers and lawnmowers as well as engines, cylinder heads and blocks for agricultural machinery. In overseas markets, its products are sold under the KIOTI brand.
TESLA OF AGRICULTURAL MACHINERY INDUSTRY
Daedong has been striving to transform into a smart mobility company, applying autonomous driving and Internet of Things (IoT) technologies to its mechanized farming equipment.
In the robotics business, the company plans to develop a variety of agricultural and industrial robots, including automatic gardening, lawn-mowing and transport robots.
In 2022, Kakao Mobility Corp., a tech giant Kakao Corp. unit, acquired a 4% stake in Daedong Mobility Co. for 10 billion won to jointly pursue smart mobility projects.
Under the deal, the two companies agreed to jointly develop next-generation smart mobility vehicles, including electric motorcycles, e-bikes, golf carts and other non-agricultural electric vehicles.
In 2023, Daedong teamed up with POSCO Holdings Inc., the parent of the country’s top steelmaker, to develop and manufacture robots for use in industrial workplaces, including steel mills.
In April 2022, Daedong established a mobility research center with KAIST to develop motor and vehicle control technology. With Seoul National University, Daedong is developing autonomous driving and smart farm technologies. With KT Corp., it is working on an indoor autonomous driving technology based on a smart robot chair.
TARGETTING OVERSEAS MARKET
To overcome sluggish demand in Korea, Daedong plans to aggressively target overseas markets from this year.
The company posted 65.4 billion won in operating profit on sales of 1.43 trillion won ($991 million) in 2024, down 74.8% and 1.4%, respectively, from the previous year.
Daedong has steadily gained ground in the US small-to-mid-sized tractor market.
To boost revenue, the company plans to integrate wireless communication services into all tractors it exports to North America starting this year.
The initiative aims to collect agricultural machinery and farming operation data in the US and provide AI-powered information services based on ChatGPT.
Daedong also plans to unveil Korea’s first Level 4 autonomous HX tractor by the end of this year – capable of handling unexpected situations without human intervention.
“We plan to leverage our reputation and technological expertise we built in the small and mid-sized tractor market to enter the medium- and large-sized tractor segment. We will launch a new product targeting overseas markets in the first half of this year,” said another Daedong official.
TYM: KOREA’S ONLY PARTNER WITH DEERE
With Daedong discontinuing its partnership with Deere, TYM Corp. is now the only Korean company selling John Deere products within Korea.
Yanmar Korea, a Japanese firm, also supplies John Deere tractors in Korea under a contract with the US tractor giant.
TYM has been expanding its collaboration with Deere in recent years.
Last September, TYM signed a deal to exclusively supply the John Deere 5075E medium- and large-sized tractors in Korea.
TYM has also been offering after-sales services for John Deere products purchased through Daedong.
Currently, TYM is responsible for 80% of John Deere products after-sales services in Korea.
“We now sell 13 types of John Deere tractors. We plan to strengthen our partnership with Deere to boost our sales revenue,” said a TYM official.
By Jong-Hwan Won and Jeong-Jin Eun
won0403@hankyung.com
In-Soo Nam edited this article.
