Domestic Tractor Sales Rise 6% YoY in November Due To Robust Festival Demand

The tractor industry experienced a 6% surge in domestic sales on a year-on-year basis in November, reaching a total of 72,266 units, according to data released by the Tractor & Mechanisation Association (TMA). Despite the positive annual growth, the volumes witnessed a significant 38% decline when compared to the preceding month of October.

Leading tractor manufacturer Mahindra & Mahindra reported a 6% increase, selling 31,069 units in November 2023. Meanwhile, Escorts Kubota's domestic tractor volumes experienced a 7% growth, reaching 7,855 units.

Industry experts and analysts attribute the year-on-year upswing to robust festival demand, bolstered by favorable Kharif harvest realizations, particularly during the festive period of Dhanteras and Diwali. However, unexpected rains in key agricultural states adversely affected demand, resulting in a decline in sequential volumes.

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Hemant Sikka, the President of the Farm Equipment Sector at Mahindra & Mahindra Ltd, remarked on the situation, noting, "The domestic market experienced increased demand during the festive season, fueled by the realizations from the Kharif harvest, and robust retail activity observed during Dhanteras and Diwali."

Despite the overall positive festive demand, some states witnessed marginal impacts due to inadequate and untimely rainfall, as noted by Escorts Kubota.

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Tractor exports remained subdued, with total exports at 6,722 units in November 2023, a decline from 9,884 units in November 2022.

The tractor production in November hit the lowest monthly figure for 2023, with 60,014 units. In comparison, the industry produced 78,709 units in November 2022, and 94,438 units in October 2023.

For the April-November 2023 period, total domestic tractor sales reached 6.6 lakh units, showing a 3% decline compared to the same period in the previous fiscal year, when sales stood at 6.8 lakh units.

While industry insiders express optimism for the remaining fiscal year, citing positive macroeconomic factors, analysts foresee muted growth for FY24. The impact of El Nino on monsoons, resulting in below-average rainfall in key agricultural regions, along with cyclicality and a high base, are expected to contribute to a subdued growth outlook for the tractor industry.

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