TNI || New Delhi || 12th March 2022
Domestic tractor sales are still sluggish, with a 31% drop year on year and a 1% drop month on month in February.
Exports, on the other hand, remained strong at 10,000+ units. Based on current trends, the tractor sector is predicted to complete FY22 with a high single-digit loss in domestic sales and a significant double-digit increase in exports.
Total domestic sales in February 2022 were 51,953 units, down from 75,645 units in February 21 and 52,767 units in January 2022.
Domestic tractor sales have been strong in the first two quarters of the current fiscal year. However, sales fell by 13.5 percent in the third quarter, to 2.24 lakh units.
Volumes increased by approximately 63 percent in the fourth quarter of the previous fiscal year when compared to Q4FY2020.Due to this high starting point, industry volume will fall in the fourth quarter of this fiscal year.
The late rainfall, the prolonged harvest of Kharif crops, which has impacted rural cash flows, and the high base impact of last year have all contributed to the drop in sales in recent months.
Over the last few months, the domestic tractor sector has been on the decline, owing primarily to low farm sentiment.
Unseasonal rainfall has hampered farm revenue in the Kharif cropping cycle of 2021–22, resulting in crop destruction in some areas as well as a reduction in crop quality.
Additionally, the cost of inputs for farmers has grown for the rabi farming cycle of 2021–22, as has the cost of vehicles, hurting farmer feelings.
According to Hemal Thakkar, Director, CRISIL Research, all these reasons mentioned have led to weak agricultural sentiments, which has impacted demand for tractors.
Overall domestic tractor sales for the first eleven months of this fiscal year were 7,69,378 units, down 5.5 percent from 8,14,331 units in April 20 to February 21.
Total domestic sales in FY21 were approximately 9 lakh units. Tractor shipments increased by 50% to 1.17 lakh units in the first eleven months of this financial year.
Thakkar adds that tractor exports are predicted to expand strongly for the second year in a row.
The demand for Indian tractors has increased in the United States, Bangladesh, and Europe. Furthermore, players’ strategic plans, such as establishing facilities in foreign countries to meet global demand, are projected to boost export sales.