Domestic tractor sales grew in single digits in July this year, but the monthly volumes were the lowest in the last seven months. Production in July was lower on a year-on-year and month-on-month basis. Exports exhibited some improvements on a month-on-month basis.
Total domestic tractor volumes increased by 6 per cent at 58,583 units in July 2023 when compared with 55,211 units in July 2022. However, July volumes were 40 per cent lower when compared with this June volumes of 98,422 units, according to data from Tractor and Mechanization Association.
How companies fared
Top tractor maker Mahindra & Mahindra Ltd reported an 11 per cent increase in its July tractor volumes at 24,168 units (21,684 units).
“The sentiments are positive in the rural economy, and this is likely to support demand in the coming months,” said Hemant Sikka, President - Farm Equipment Sector, Mahindra & Mahindra Ltd.
Sonalika Tractors’s July tractor sales in the domestic market grew 14 per cent at 7673 units (6738 units). Its exports stood at 3,010 units against 3,535 units.
Escorts Kubota’s tractor volumes in July 2023 grew 10 per cent at 5161 units (4704 in July 2022). But its June 2023 sales were significantly higher at 9,270 units.
While monsoon has progressed well in the last 2 month barring certain eastern pockets, some parts of the country have received heavy rainfall, resulting in flood-like situations and affecting on-ground activities, said the company, which expect the retail demand to pick up from September.
Total tractor production in July 2023 stood at 89,196 units (101,421 units) and 92,266 units in June 2023.
The tractor exports grew to 8,460 units in July 2023 when compared with 8198 units in June 2023. But, exports were lower when compared with 11,836 units in July 2022.
Dull demand
“In the European market, where the larger exports were happening, as well as the U.S. market, the demand has slowed down, especially for compact tractors,” Bharat Madan, Whole Time Director and CFO of Escorts Kubota said during the company’s Q1FY24 earnings call.
Inflation and recessionary outlooks in the European countries are among the factors for demand slowdown. In some countries like Poland, subsidy programmes have not started. So, all these issues are impacting the demand, and as a result exports from India have dropped.
Escorts Kubota expects its export volume to improve from the last quarter of FY24.