Tractor sales to rebound after the fall in August [Sep 19, 2021]
The Tractor manufacturers across the country are higly bullish about the sales during September 21 and coming months.A steep decline of 17 per cent year-on-year in August sales – the first in 18 months - has not dampened the spirits of tractor makers. The manufactures are expecting sales to rebound in the months to come. Their confidence stems from higher reservoir levels, government incentives for the agriculture (agri) sector, and a high minimum support price.
Cumulative tractor sales of the top five tractor makers - Mahindra & Mahindra (M&M), Tractors and Farm Equipment, John Deere India, Sonalika, and Escorts - have skidded 17 per cent to 47,630 units in August, from 57,727 units in the corresponding month a year ago.
The decline comes on the back of last year's high base and a wilting pent-up demand. After a high-paced growth seen for over a decade, the rate of growth is expected to moderate to low single digits in the months ahead, but tractor sales for the full year will still touch a fresh high in absolute volume terms, revealed CRISIL Research.
One of the largest markets for tractors globally, India sold 900,000 tractors in 2020-21.The research house expects it to touch 930,000 by the end of 2021-22 (FY22).
Hemant Sikka, President-farm equipment Division, M&M, believes, a smart recovery in the overall acreage of kharif crops, bodes well for the tractor market.During the August, the tractor market leader saw sales decline 15 per cent YoY to 19,997 units. But the company is confident about recouping volumes.
Shailendra Jagtap, managing director and country manager at John Deere India, said, "We are quite positive about the road ahead and expect sales to rebound in September and October since farmers are keen to purchase reliable and technologically advanced products.”
Good price realisations of their crop and curtailment in lifestyle-related expenses have augmented disposable incomes of farmers & has augured well for tractor and farm machinery equipment, pointed out Jagtap.
The local arm of the American tractor maker, the third largest by sales, sold 7,158 units in the domestic market, down 4 per cent YoY.
Tractor sales in India have been advancing at a compound annual growth rate of 10 per cent over 15-plus years. due to high penetration levels.Penetration rates for tractors have already risen to 45-50 tractors per 1,000 hectares (ha), which is higher than the world average of 30 tractors per 1,000 ha.
The bullish trend in tractors sales is expected to push up the scrip of Mahindra & Mahindra,India's Leading Tractor and Farm Equipment manufacturer.