Domestic Tractor Sales: Setting Record High With 9.44 Lakh Tractors Sold

Tractor sales, including exports, surpassed one million units in the year ending March 31. This was due to the rise in minimum support prices (MSP), which led to an increase in farm income, as well as another year of above-average monsoon.

Domestic Tractor Sales: Setting Record high, 9.44 Lakh Tractors Sold

According to industry estimates, sales of tractors in India, which is the world's biggest market for such agricultural vehicles, reached a historic peak of 9,44,000 units in the fiscal year 2022-23, representing a 12% increase from the previous year. However, industry experts predict that the growth in sales may slow down to low-single digits in the upcoming fiscal year.

According to Sikka, the availability of financing and a satisfactory farm income have encouraged farmers to purchase tractors, which they view as valuable assets. As per industry executives, domestic tractor sales have increased by a significant 23% year on year, starting from September of the previous year, even before the commencement of the festive season.

Various tractor manufacturers, including Mahindra, Tafe, Sonalika, and John Deere, have introduced a range of models with varying horsepower, resulting in increased demand for their products. In addition to their primary agricultural use, tractors are also utilized for hauling goods in rural areas, generating additional income for farmers who own them, according to Sikka, who serves as both the president of the Tractor and Mechanization Association (TMA) and a spokesperson for the industry.

Furthermore, with a scarcity of farm labor, tractors have become even more indispensable to farmers.

According to experts, government initiatives targeted at certain states have helped boost farming, leading to an increase in tractor sales. Despite the positive outlook, industry insiders warn of potential risks that could affect sales in the future.

TAFE's President of Sales and Marketing, Bharatendu Kapoor, predicts that the strong sales momentum observed in the first quarter of FY24 will persist, but growth may slow down after July.

According to a recent note by Crisil Ratings, parts of northern and central India are experiencing abnormally high temperatures followed by unexpected rainfall, which is causing concerns about a potentially weaker rabi harvest this year. Additionally, this weather pattern may harm tractor sales.

According to the rating agency, the growth in sales volume of domestic tractors is expected to reduce by half, to a range of 4-6%, in the fiscal year 2024. This decline is due to the high base created by a compound average growth rate of 10% since the fiscal year 2020, which was achieved due to successive normal monsoons.

Weather agencies have indicated that there is a possibility of an El Nino event occurring between July and September of this year. This could result in lower-than-average levels of rainfall. Despite having reservoirs with above-average levels of water, there may still be uncertainties that could persist.

According to Crisil, the shortfall in monsoon during the financial years 2015 and 2016, caused by the El Nino effect, had a significant impact on farm incomes and resulted in a decline of 13% and 10% in tractor sales volumes, respectively.

According to Shailendra Jagtap, who serves as the managing director of John Deere, although the growth rate may slow down to a single digit in the current year, the demand for tractors is expected to remain strong. Mr. Jagtap also mentioned that unpredictable weather patterns, such as unseasonal rains and hailstorms resulting from climate change, could harm farm output. However, he remains optimistic about the tractor industry as a strong rural economy and availability of finances are expected to sustain the momentum.

Source-The Economic Times

VST Tillers Tractors Sales Report: 71.29% Increase In March 2023 Sales

Tractor Sales Report: Escorts Kubota March Tractor Sales Up By 2.3%