Tractor sales record marginal drop in August; exports stay in the growth lane

The domestic tractor industry reported a very marginal year-on-year decline in sales during August 2022 as a combination of high base effect and uneven spread of monsoon continued to impact tractor volumes in the country.

This is the third month in a row that domestic tractor sales have reported a y-o-y decline after a rebound in volumes in April.

Domestic tractor sales stood at 52,691 units in August compared with 53,721 units in August 2021, recording a fall of about 2 per cent. The decline was a little higher, at about 5 per cent, when compared with July 2022 volumes, according to the data provided by Tractor & Mechanisation Association (TMA).

Demand moderation

“Even as IMD had forecast a fourth consecutive normal monsoon and the overall precipitation has been healthy, the precipitation has been uneven across regions; kharif sowing area has lagged previous year levels, dragged down by rice sowing. Also, the price hikes taken by the OEMs may lead to demand moderation and remain monitorable. A healthy monsoon performance for the remaining monsoon period remains critical for the prospects of the farming community,” Rohan Kanwar Gupta, Vice President & Sector Head, Corporate Ratings, ICRA, told BusinessLine.

For the first 5-month period of this fiscal, total domestic tractor volumes grew 7 per cent at 3.73 lakh units compared with 3.48 lakh units in the year-ago period, mainly supported by strong June quarter volumes.

Optimistic outlook

The industry remains optimistic about healthy demand over the near term, supported by expectations of stable farm cash flows.

“We are optimistic that tractor purchases on auspicious days in the festive season will lead to a revival in demand, as farmers start preparing for harvesting operations. We are preparing for strong tractor demand in the festive season,” said Hemant Sikka, President – Farm Equipment Sector, Mahindra & Mahindra Ltd.

While the domestic industry reports moderation in sales, exports of “Made in India” tractors stay robust as they grew 3 per cent at 12,118 units. For the April-August 2022 period, exports grew 19 per cent to 59,100 units.

Production of tractors during August stood at 98,745 units (105,422 units in August 2021 and 101,421 units in July 2022).

Rainfall to the rescue

With respect to sales, Uttar Pradesh, Rajasthan, Maharashtra and Karnataka were the top four States contributing 57 per cent of it, according to Tractor Junction, an e-commerce platform for tractors and farm implements.

“According to the IMD, major regions across the country will receive normal to above normal rainfall in September; this augurs well for the farm sector, volumes of tractors, and other farm equipment. This coupled with the festive season demand will help recover sales in the remaining month of the year,” said Rajat Gupta, Founder, Tractor Junction.

Published on

September 12, 2022

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