Tractor Sales Dip By 4% in October, But Industry Sees Potential Turnaround
Despite a 4% YoY dip in domestic tractor sales for October 2023, the industry witnessed a promising 22% MoM surge, signaling a potential turnaround. November expectations remain high with festive season momentum.
According to the Tractor & Mechanization Association (TMA), domestic tractor sales experienced a 4% year-on-year decline in October 2023, totaling 118,232 units compared to 123,525 in the same period last year. However, an increase of 22% month-on-month was observed from September 2023, when sales stood at 96,934.
The two-month span of the festive season impacted October sales, which were slightly subdued compared to the previous year. Industry players remain optimistic about November sales, expecting them to be boosted by Dhanteras and Diwali purchases.
Leading tractor manufacturer Mahindra & Mahindra faced a 2% dip with 49,336 units sold, while Escorts Kubota experienced a 9% decrease, selling 12,642 units in October 2023.
Export figures took a hit, reaching a low of 7,186 units in October 2023, the lowest since June 2020. On the production front, 94,438 tractors were manufactured in October, compared to 90,688 in September 2023 and 86,856 in October 2022.
Across different regions, the North emerged as the frontrunner in tractor sales, followed by the West and East. In contrast, the South grappled with setbacks stemming from inadequate rainfall and diminished subsidies. Subsidies, particularly in states like Gujarat, Chattisgarh, Odisha, Jharkhand, and Assam, proved crucial in promoting tractor sales in the West and East.
During the April-October period, domestic tractor sales reached 5.88 lakh units, representing a 4% decline compared to the previous fiscal year. Production and exports for the same period totaled 6.27 lakh units and 0.57 lakh units, respectively, reflecting a downward trend from 6.76 lakh units and 0.79 lakh units in the corresponding period of the previous year.
According to Hemant Sikka, the President of the Farm Equipment Sector at Mahindra & Mahindra Ltd, he anticipates a more favorable second half of the current fiscal year. This optimism is based on the expected increase in overall kharif production, elevated Minimum Support Prices (MSP) for crucial rabi crops, and the government's backing of the agricultural economy. Sikka believes these factors will generate positive feelings among farmers, ultimately leading the demand for tractors.
While the overall tractor industry is likely to end the fiscal year with flat or marginal positive growth, tractor exports are projected to decline by double digits in FY24. Concerns about a sub-normal monsoon and a high base contribute to the flat outlook for FY24.
Escorts highlighted the impact of the European recession on its exports, along with product-related issues. Mahindra & Mahindra reported a 33% year-on-year decline in tractor exports during the April-October 2023 period, with 7,470 units sold.
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