Annual tractor production crossed 1 m, with exports crossing 1 lakh in 2021 for the first time

Although production and domestic sales hit a 20-month low in December, the calendar year 2021 proved to be a record year for the tractor industry, annual production has crossed the one million milestone and exports have reached the lakh mark.

Due to the boost in domestic sales in the first half of 2021 and the continued growth in exports over the past few months, total domestic tractor production reached 1,065,280 units in 2021, the highest annual figure compared to 8,63,125 units in 2020.

Total domestic sales grew by 13 percent in 2021 to 9,03,724 units from 8,02,670 units in 2020, while exports increased by 61 percent to 1,24,901 units, the highest annual export volume ever. Exports in 2020 stood at 77,378 units.

However, tractor production and domestic sales hit a 20-month low in December 2021.

According to data provided by the company, total domestic sales fell 27 percent in December 2021 to 61,249 units from 61,249 units in December 2020. On a sequential basis, December volumes declined by 30 percent to 63,783 units compared to December 2021 sales. Tractor and Mechanization Association (TMA).

"This is the fifth month of weak tractor sales and the relatively high base and late harvest due to uneven and prolonged monsoons. Accordingly, rural sentiments are relatively muted, "said Shamsher Diwan, ICRA Vice President, and Group Head - Corporate Ratings.

Total output fell to 53,527 units in December 2021 from 67,566 units in November 2021 and 91,969 units in December 2020. However, tractor exports grew by 7 percent to 11,186 units as of December 29, up from 11,186 units last year, in December 2020.

According to Hemant Sikka, President-Agricultural Equipment Division, Mahindra & Mahindra, “declining sales in December was due to a combination of factors such as high bases and delays last year and very heavy rainfall over specific geographical areas." Company reported a 21 percent decline in tractor sales in December.

Tractor market leader Mahindra expects to bring liquidity into the hands of farmers in the coming months on the back of good progress in Kharif purchases and the rabi sector showing signs of growth compared to last year.

"We expect FY22 tractor sales to fall by 2-6 percent. However, medium-term drivers will help the farming community through continued support and a growing trend of automation, ”said Diwan.