Tractor makers have revised sales growth guidance for FY23 to low double digits from earlier projected high single numbers for the current fiscal due to robust demand amid positive farm sentiments.
Tractor demand has remained steady, supported by a fourth consecutive normal monsoon and government support measures during this fiscal.
Top tractor maker Mahindra & Mahindra had projected a growth outlook of 3-5 per cent for the domestic tractor industry. However, it has now revised the growth guidance upwards.
The company expects the domestic tractor volumes to grow more than 10 per cent in FY23, Rajesh Jejurikar, Managing Director, M&M, said during the Q3 earnings call.
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Escorts Kubota expects the positive momentum in the tractor industry to continue resulting in the domestic volumes reaching a new peak of 9 lakh+ units in this fiscal, aided by high reservoir levels, easy financing, healthy Rabi season, and better crop realisations.
Continuing the positive momentum, tractor production and sales have reported y-on-y growth in January, while exports declined significantly.
Total domestic tractor sales grew 24 per cent at 65,635 units in January 2023 when compared with 52,767 units in January 2022, while total production was higher at 90,633 units when compared with 72,064 units in January January 2022 and 59,106 units in December 2022, according to data provided by the Tractor & Mechanisation Association (TMA).
Exports fell 26 per cent at 7764 units in January 2023 against 10,490 units in January 2022 due to adverse market conditions in some markets. “A volatile geo-political scenario has led to the devaluation of currencies in certain geographies. Consequently, the industry’s export volumes have slowed down over the past few months,” said Rohan Kanwar Gupta, Vice President & Sector Head, ICRA Ltd.
For the ten months of this fiscal year, total domestic tractor sales grew by 11.5 per cent at 800,088 units compared with 717,425 units in the same previous fiscal period. Total exports stood at 107,445 units against 106,957 units, while total production grew to 904,488 units compared to 842,043 units.
Despite a delayed kharif harvest, a healthy rabi sowing pace provides optimism. Amid an increase in finance cost due to repo rate hikes, financing availability remains adequate, led by moderate delinquencies, said Gupta.
In FY22, total domestic volumes stood at 8.42 lakh units compared with 8.99 lakh units, the highest-ever annual number, in the previous fiscal year.