While overall automobile sales growth continues to struggle in the negative region, a better-than-expected monsoon combined with an expected increase in crop prices have seen sales in the tractor segment perform much better than other categories in September. According to sales data released by tractor manufacturers Escorts and Mahindra and Mahindra, year-on-year (y-o-y)domestic volume growth in the segment has improved considerably in September compared to the previous few months, inching past the zero line into positive territory.
While Mahindra’s domestic tractor sales grew by 0.3 per cent during the month, the first time demand has increased on a y-o-y basis this financial year, to hit 36,046 units compared to 35,953 units in September 2018. Escorts meanwhile, recorded a 1.2 per cent increase in domestic sales at 10,521 units, as against 10,396 units in September last year. The growth in tractor sales stands in sharp contrast to other segments
like passenger and commercial vehicles, which have continued to tank y-o-y despite the expected boost from early festive season offers.
Analysts note that the marginal revival in demand for tractors indicates a reversal in sentiment in the rural agri-sector focused market. “Better than expected monsoon, better reservoir levels and expectation of increase in crop prices have given some relief to tractor volumes,” noted Sneha Prashant, analyst with Centrum Broking, adding “Our channel checks suggest that dealers are sitting on low inventory and expect good pick up” in the second half of the fiscal year.
According to dealers, while the first half of the current financial year saw a staggering 20-25 per cent fall in tractor sales, the second half is expected to see demand trends reversing. “(Second half) is expected to see 8-10 per cent growth led by festive season and good monsoon,” Centrum noted.
According to JM Financial, the growth in sales was also supported by pre-harvest channel filling by manufacturers. Industry executives agree that though marginal, the uptick in September is a good sign for the upcoming core festive season, which is traditionally a very strong month for tractor sales.
Sales scenario during September
Mahindra’s domestic tractor sales grew by 0.3 per cent during September on y-o-y basis. While Escorts recorded a 1.2 per cent increase in domestic sales at 10,521 units.