Domestic tractor sales between January and September have surpassed the sales of the corresponding period in 2019, becoming the first segment to achieve the feat this year.
Car and SUV, two-wheeler, commercial vehicle and three-wheeler segments are still in the red on a cumulative basis, till September.
Record improvement in agricultural harvest, government’s rural development schemes, higher Minimum Support Price (MSP) and record water levels in reservoirs have resulted in a 5 percent increase in domestic tractor sales till September, as per data shared by the Tractor Manufacturers Association (TMA).
The industry recorded sales of 543,936 units during January-September 2020 against 519,398 in the same period last year. In 2018, the industry closed the same nine months with sales of 579,878 units. India is the biggest market for tractors in the world, followed by China.
September sales hit two-year high
September sales this year were almost at a two-year high. October typically churns out the highest tractor volumes in a year owing to the festive days. Manufacturers are expecting sales in the last three months of the year to surpass the sales of not just last year, but of 2018, too, thus making it the best sales in a year so far.
“A bumper harvest this year is keeping the (tractor) production lines busy. If not for the lockdown in April, sales this year would have beaten the sales of even 2018 by now. We have more than doubled our growth estimates for the year, and we should be able to beat the sales of 2018, making it the best year for tractors ever,” said a senior executive of one of India’s dozen-odd tractor manufacturers.
In the whole of 2019, the industry sold 723,525 tractors in the domestic market, while, in 2018, the industry achieved its best-ever domestic sales of 796,932 units. In 2017, total domestic sales stood at 659,304 units, as per TMA data.
ICRA revises growth
Shamsher Dewan, Vice President, rating agency ICRA, said, “The strong revival in tractor volumes were aided by healthy rabi cash flows across regions and progress of monsoon (in line with forecasts). Further, Original Equipment Manufacturers (OEMs) have been ramping up production levels to stock inventory, ahead of the festive season and are gearing up for healthy sales for the rest of the year.”
ICRA has upwardly revised its industry growth forecast to 7-9 percent in FY2021 from an earlier estimate of 2-4 percent, which was due to the uncertainty regarding the impact of the pandemic on the farming community.
While this uncertainty still continues, the rural agricultural scenario, which matters more for robust tractor demand, is supportive of growth.
Kharif sowing has witnessed record progress of areas covered. So far in 2020, 1,116.88 lakh hectares have been sown compared to 1,066.06 lakh hectares in 2019.
Market share swings
The strong pick-up in volumes has allowed tractor manufacturers to go after market share. International Tractors Ltd (ITL), which sells the Sonalika brand of tractors, mostly in the north of the country, emerged as one of the biggest market share gainers during July-September.
ITL improved its domestic retail market share to 12.8 percent by the end of September as compared to 11.8 percent by the end of July, according to data shared by the Federation of Automobile Dealers Association, which sources data from 86 percent of India’s Regional Transport Offices (RTOs).
Market leader Mahindra & Mahindra lost its market share during the same period. The Mumbai-based company, which sells the Mahindra and Swaraj brand of tractors, closed September with a share of 39.47 percent against the 40.5 percent recorded in July.