Domestic tractor sales slip 4% in October, exports hit 3-year low

Domestic tractor sales fell by 4 per cent year-on-year in October, but increased 22 per cent month-on-month.

In all, 118,232 tractors were sold in October this year, compared with 123,525 a year ago. However, the October sales were up by double digits from 96,934 in September 2023, according to  data from Tractor & Mechanization Association (TMA).

Industry representatives and analysts pointed out that the festive season this year is spread across two months and hence October sales were slightly muted compared with last year. However, November sales would be better, driven by Dhanteras and Diwali buying.

Top tractor maker Mahindra & Mahindrareported a 2 per cent decline at 49,336 units in October 2023, while Escorts Kubota’s tractor sales last month fell 9 per cent at 12,642 units

Slide in exports

At 7,186 units in October 2023, monthly exports were at the lowest since June 2020.

Tractor production stood at 94,438 units in October, when compared with 90,688 in September 2023 and 86,856 in October 2022.

The North region has been the best performer, followed by the West and East, whereas the South is under pressure. The West and East regions’ performance has been supported by subsidies (especially in States such as Gujarat, Chattisgarh, Odisha, Jharkhand and Assam). South’s performance suffered owing to a deficit rainfall season and lower subsidies by State governments (especially in the Telangana State), according to brokerage house Nuvama.

During the April-October period, domestic tractor sales stood at 5.88 lakh units, falling 4 per cent from 6.11 lakh in the same period the previous fiscal.

Also read:Mahindra & Mahindra’s shares up on October’s auto sales

Production and exports were also lower in the first seven-month period of this fiscal at 6.27 lakh units (6.76 lakh units in the same period of FY23) and 0.57 lakh units (0.79 lakh units), respectively.

Second-half outlook

Hemant Sikka, President–Farm Equipment Sector, Mahindra & Mahindra Ltd, said H2 of the current fiscal would be better as higher aggregate kharif production, higher MSP for key rabi crops, and the government’s support to the agri economy will drive positive sentiments among farmers, supporting tractor demand.

While the tractor industry is likely to end the current fiscal with flat or marginal positive growth, supported by expected strong demand in H2, exports are unlikely to see any improvements and FY24 would see a double-digit decline. For the current fiscal, tractor exports have seen a decline of 28 per cent.

Nuvama projects a flat number for FY24 due to concerns around a sub-normal monsoon and a high base.

Mahindra & Mahindra has reported a 33 per cent year-on-year decline in tractor exports at 7,470 units during the April-October 2023 period.

Escorts’ management had indicated that the recession in Europe, one of its major markets, was impacting its exports in addition to issues on the product side.

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