Tractor makers hopeful of jump in sales: Report

• Follow

Despite inadequate monsoon, tractor makers are expecting sales to bounce back in the months to come. Their undeterred confidence comes from higher reservoir levels, government incentives for the agriculture sector and a high Minimum Support Price (MSP). In August a steep decline of 17% YoY sales was recorded for the first time in 18 months, according to a report in Business Standard. Mahindra & Mahindra (M&M), Tractors and Farm equipment, John Deere India, Sonalika and Escort’s (top five tractor makers) cumulative sales declined by 17% to 47,630 units in August 2021, from 57,727 units in the corresponding month from the previous year.

The decline comes on the back of last year’s waning pent-up demand and last year’s high base effect. In the months ahead the rate of growth is expected to moderate to low single digits. However, in absolute volume terms tractor sales for the full year will touch a fresh high, according to estimates from CRISIL Research.

It further added that the country’s sales is expected to touch 9,30,000 by the end of 2021-22 (FY 22). India is one of the largest markets for tractors globally, it had sold 9,00,000tractors in FY 21, CRISIL said.

Monsoon to boost prospects by next rabi season

The Indian Meteorological Department last week, said that the southwest monsoon is expected to be better in September, with rains projected to be more than 110% of the long period average, but not good enough to cover up the entire seasonal deficiency. But it will boost the prospects of the next rabi crop season and fill reservoirs.

Monsoon in August was almost 24% below normal with patchy rainfall. It was also the sixth driest August since 1901. In July there was a shortfall in monsoon by 7%.

One of the worst affected tractor makers like Escorts are depending on high levels of reservoirs and government support. The company’s sales had declined by 27% YoY to 4,920 units.

A smart recovery in the overall acreage of khariff crops, with key crops posting acreage levels closer to last year’s sown area, despite erratic monsoon, bodes well for the tractor market.