Rabi crop season is likely to give some respite to the volume sales, but for the rest of the reason, tractor sales is likely to remain subdued on account of weak rural sentiment.
According to ICRA, weak rural sentiment and uneven monsoon may impact kharif crop output and farm incomes going forward, which will result in a moderate decline in domestic volumes. Data from Industry apex body Tractor Manufacturers’ Association showed tractor sales fell from 8,40,804 units in January-November 2018 to 7,23,197 units in the same period this year. During the April-November period of FY20, tractor sales fell by nearly 12 per cent on year.
“Overall, we expect tractor volumes to contact by 7-9 per cent in FY20, with moderation in decline in the second half of the ongoing fiscal. In H1, the domestic industry volumes declined by 12.2 per cent year,” ICRA noted.
Market leader Mahindra and Mahindra saw four per cent growth in December 2019, while its April-Dec cumulative sales stood at 2,42,625 units, down 10 per cent from 269,558 units sold during the same period last year.
Meanwhile, rival Escorts sold 4,114 tractor units in December, down 10.5 per cent compared to 4,598 units sold a year ago. Tractors sales of April-December period stood at 65,910 units, down 7.5 per cent from a year ago. Some tractor companies like Sonalika International Tractors reported a healthy 20.7 per cent growth in domestic sales selling 7,320 units in December 2019. However, it was mostly driven by exports. On a positive note, ICRA said that credit profiles would remain healthy, even as OEMs continue to invest on upgradation for a smooth BSVI transition.