Festival demand pushes national tractor sales to historic high in October
With a boost from the festival, the domestic tractor industry hit a historic volume level in October, but exports moderated in the month.
September was also a good month for the industry. As the sales momentum continued in October and the festival season further boosted positive sentiments, the total volume of domestic tractors stood at 1.24 lakh units (up 7% in year-over-year), the highest monthly sales to date.
On a monthly basis, the growth was 9%, according to data provided by Tractor & Mechanization Association (TMA).
October was the second month that national tractor sales recorded year-over-year growth after April.
“Wholesale volumes over the past two months (September and October) have grown at a healthy pace (23% and 7% YoY, respectively) as OEMs build up dealer inventory to meet the strong demand during festival season. Retail sales over the 42-day festival period grew at a healthy pace of around 30% to 77,602 units, helped by stable farm cash flow,” ratings agency ICRA said.
“The festival season has kept spirits up and has led to very strong demand for tractors and farm machinery,” said Hemant Sikka, president of farm equipment business, M&M. The company saw its tractor sales increase by 10% to 50,539 units.
Sonalika Tractors said the company recorded its highest ever deliveries of 20,000 tractors in October with billing growth of 16%, nearly double industry growth in the month. “OEMs have become aggressive with discounts this festival season in an effort to gain market share,” analysts Motilal Oswal Financial Services said.
Total tractor production in October stood at 86,856 units compared to 90,395 units in October 2021. For the first time in 16 months, tractor exports fell below 10,000 units. Total exports amounted to 8,888 units compared to 12,194 units in October 2021.
For the April-October period, total domestic tractor sales increased 10% to 610,731 units from 556,447 units a year ago, while total exports increased 6% to 79,308 units from 74 491 units.
“For FY23, we expect the domestic tractor industry to experience single-digit growth and could hit a new high in the current fiscal year. The last observed peak was in FY21 when the industry hit 9 lakh tractors,” said Bharat Madan, Chairman Finance, Group Chief Financial Officer and Business Leader, Escorts Kubota Ltd.