Tractor sales. Tractor sales soar in June on pent-up demand, robust rural economy

Domestic tractor sales hit a record high in June, helped by pent-up demand after easing of the lockdown and a robust rural economy.

Last month, total domestic tractor sales stood at 1,10,399 unitsagainst 92,888 units in June 2020 and 63,313 units in lockdown-hit May 2021.

Strong recovery

“Sales of 1 lakh tractors in a single month is a testament to strong recovery that is being witnessed in rural market as Covid-19 related restrictions ease out and farmers prepare for Kharif crop cycle,” said Hemant Sikka, President, Farm Equipment Sector, Mahindra & Mahindra.

June 2021’s total tractor sales were the third highest monthly number in the past 28 months. In October 2020, total domestic tractor sales stood at 115,155 units, while in October 2018, the monthly tractor sales stood at 112,556 units.

Despite sales slowdown in May due to lockdown restrictions, total domestic tractor volumes grew 39 per cent at 2.29 lakh units for Q1 of this fiscal compared with 1.65 lakh units in April-June 2020 period.

With more than 10,000 tractor shipments in June, total tractor exports from India more than doubled to 26,660 units during Q1 of this fiscal compared to 10,808 units in the year-ago quarter.

Mahindra & Mahindra reported a 48 per cent growth in Q1 volumes at 95,848 units compared with 64,577 units in the year-ago quarter. “We continue to remain optimistic about the progress of the monsoon and tractor demand in the coming months,” said Sikka.

Production increases

Total tractor production in the country stood at about 2.49 lakh units during April-June 2021 period compared to 1.12 lakh units in the year-ago quarter, which reflects tractor makers’ better abilities to manage their supply chain and manufacturing capabilities by beating Covid-19 blues and other associated challenges.

Tractor makers and analysts expect the demand to stay robust amid the threat of a third wave of pandemic. They hope government’s vaccination drive will help prevent third wave to a larger extent thereby allowing the wheels of the economy to keep moving.

“We expect demand to improve in tractor segment on the back of resilient rural incomes on account of higher income visibility due to better outlook on farm incomes (higher MSPs, better yield), and rural infrastructure spend-driven income effect,” said an analyst at ICICI Securities.

In FY21, the tractor industry grew by 27 per cent. It is expected to maintain the momentum with a moderate growth of 5-10% (due to a high base effect) aided by a normal monsoon, healthy crop output, and increased government spending on development activities.