Amidst a decline in tractor volumes in FY20, the market trend of shifting towards higher HP tractors was intact, with the growing share of the segment in overall domestic sales.
The domestic tractor industry reported a fall of about 10 per cent in total volumes at 7.09 lakh units for FY20, as against 7.87 lakh units in 2018-19. After recording growth of 21 per cent, 22 per cent and 8 per cent in 2016-17, 2017-18 and 2018-19 respectively, volumes moved southwards in 2019-20.
The tractor market has been witnessing a shift towards higher HP segment (above 40HP products) in the past few years due to various factors. In FY20, above 40HP tractors were preferred products, though volumes fell when compared with FY19.
Many advantages
“People prefer higher HP tractors due to their use in multiple soil conditions and for other allied services in addition to new features and other productivity benefits offered by these tractors, according to a senior official of a leading tractor company.
The share of above 40HP tractors in the overall domestic volumes grew to about 57 per cent in FY20 compared to about 55 per cent in FY19, though volumes fell about 7 per cent.
“The Indian tractor market is graduating towards higher HP segment, with the 41-50 HP segment constituting the bulk of tractor sales at about 49 per cent in FY20. The above 50 HP segment constituted about 8 per cent,” according to analysts at ICICI Securities.
The premium category (above 50HP) was reporting strong growth during FY16-FY19, but in the past two years, volumes started to decline. This segment is expected to be under pressure as the upcoming emission norms for tractors are likely to be stringent for above 50 HP tractors.
However, the 41-50 HP segment is expected to remain as a major segment in the tractor market due to several advantages.
Mahindra grows share
Meanwhile, tractor-market leader Mahindra & Mahindra (M&M) managed to improve its market share in FY20, while most other players reported some loss of share in the year.
Its share grew to 41.2 per cent in FY20 from 40.3 per cent. The second big player in India, TAFE, saw a drop in its share to 16.9 per cent from 18.4 per cent, according to a report of ICICI Securities.
However, there has been stiff competition between Escorts and Sonalika Tractors for third place, and Escorts managed with a marginal dip in share to 11.6 per cent from 11.8 per cent in FY19, while Sonalika Tractors’ share fell to 11.7 per cent in FY20 from 12.2 per cent.
But, John Deere’s market share grew to 9.6 per cent from 8.7 per cent. During FY16-20, both Escorts and John Deere have gained good market share to the tune of 350 bps.
In FY20, Uttar Pradesh remained the largest tractor market with about 17 per cent volume share, followed by Madhya Pradesh (12 per cent), Rajasthan (10 per cent), Maharashtra (9 per cent) and Gujarat (8 per cent).