Despite a strong month-on-month increase in September, the second quarter of this fiscal proved to be subdued for the tractor industry as total domestic volumes fell 6 per cent when compared with Q2 of the previous fiscal. Production and exports also reported a y-o-y decline lower in September 2023 quarter.

Total domestic tractor sales stood at 96,934 units in September this year when compared with 1,13,686 units in September 2022, according to the data provided by the Tractor & Mechanization Association (TMA).

“The reason for the underperformance was a high base and an uneven monsoon, which has led farmers to be more cautious about buying new tractors. In addition, the postponement of the festival season to Q3 has also contributed to the decline in sales,” according to Saji John, Senior Research analyst at Geojit Financial Services.

Optimistic outlook

However, September 2023 volumes were significantly higher when compared with August 2023 domestic volumes of 53,249 units.

Both Mahindra & Mahindra and Escorts Kubota reported an 11 per cent decline in domestic tractor volumes at 42,034 units and 10,114 units in September 2023.

Escorts attributed the fall in volumes during the month to the postponement of the main festival season to the December quarter had impacted sales in September.

For the second quarter ended September 30, 2023, total domestic tractor sales stood at 208,766 units when compared with 221,588 units in Q2 of the previous fiscal, posting a decline of 6 per cent.

Production and exports were also lower during the quarter at 274,009 units (304,864 units in Q2 of FY23) and 25,857 units (35,274 units) respectively.

For the first half of this fiscal, total domestic sales were at about 4.7 lakh units when compared with 4.9 lakh units in the same period previous year.

Meanwhile, tractor makers have built up inventories anticipating a strong festival season offtake. Improved rainfall in September, likely good kharif harvest, and with overall macroeconomic factors and farmers’ sentiments remaining positive, we expect growth momentum to pick up in the festival months of October & November and possibly continue for the remaining part of the current fiscal,” said Escorts Kubota.

Hemant Sikka, President – Farm Equipment Sector, Mahindra & Mahindra Ltd said normal rains in September have helped the overall monsoon to achieve near normal levels and this will help in Rabi sowing, especially in Central, Northern, and Western regions of the country.

However, the tractor industry is expected to end this fiscal with muted growth due to the high base last year, owing to record tractor sales in FY23. Also, below normal and erratic monsoons across the country may hurt tractor demand in this fiscal.

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