The Hindu Business Line : M&M low-cost tractor to debut in June

‘Nano’ tractor
The new tractor could be priced a little over Rs 1.5 lakh
The company hopes to sell at least 5,000 units in the first year
M&M may kick off some financing programmes for easy lending

Manu P. Toms

Mumbai, Dec. 17 Mahindra & Mahindra’s ultra low-cost tractor, tipped to be the ‘Nano version’ of tractors, is scheduled to be launched in June 2009.

According to top sources, it could be priced a little over Rs 1.5 lakh which will make it the least expensive product in this segment. The average price of a tractor ranges upwards from Rs 3 lakh.

M&M has reportedly already developed a few prototypes which have been delivered to farmers for testing. The biggest challenge for such a project is costing and the people involved with the project are pulling out all stops to make the final price tag a reality.

“The production cost per unit is still slightly higher than the internal target set by the company. At present, it is slightly upwards of Rs 20,000 but metal prices have fallen and that augurs well, in terms of input costs,” sources said.

The tractor is intended for use in small holding where farmers can only afford the traditional oxen pulling a cart to till the land. It would still be an expensive option to this user segment but M&M could kick off some unique finance schemes with banks to make lending easy.

Interestingly, the low-cost option is not too uncommon in interior Gujarat where small vendors assemble basic tractors.

The company hopes to sell at least 5,000 units in the first year, going upwards to 25,000 from the second year. Sources say there is immense potential for the product given that market penetration in India is a mere 19 out of 1,000 farmers in India. Affordability is the key in the farm segment where delayed rains or excessive flooding can wreak havoc and postpone buying.

“To that extent, the tractor sector is not the easiest of businesses because it is a regular roller-coaster ride,” sources say.

The M&M initiative is interesting for another reason because it has a parallel in the car segment in the form of the Tata Nano. The tractor will debut soon after the Rs 1-lakh car and both will be part of the “fortune at the bottom of the pyramid” mantra. By the end of the day, as observers say, customisation is the way forward in the tractor sector.

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Mahindra to launch gas-run tractors

More Stories on : Outlook | HCV/LCV/Tractors | Mahindra & Mahindra Ltd

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