Companies

Tractor exports hit historic high in August, but domestic volumes decline

G Balachandar Chennai | Updated on September 13, 2021

File photo   -  Businessline

Price hikes by tractor manufacturers seem to have impacted the demand.

The Indian tractor industry witnessed a mixed trend in August 2021. While exports hit a historic high and the total production stayed in over one lakh for the second consecutive month, domestic sales declined during the month.

In August 2021, the total domestic tractor production stood at 1,05,422 units, the largest-ever monthly number in 2021. This is the third time the monthly tractor production surpassed one lakh mark in this calendar year.

Tractor exports continued to zoom as total exports at 11,760 units was the highest-ever monthly number. Also, tractor exports crossed the 10,000 unit mark for the third consecutive month in 2021.

However, sales in the domestic market appear to moderate and in August 2021, total domestic sales stood at 53,721 units when compared with 64,729 units in August 2020 and 65,216 units in July 2021, posting 17 per cent decline year-on-year and 17.6 per cent drop month-on-month, according to according to data provided by the Tractor & Mechanisation Association (TMA).

Industry representatives attributed the drop in domestic sales to the higher base effect. Also, price hikes by tractor manufacturers seem to have impacted the demand.

Top tractor maker Mahindra & Mahindra (M&M) reported a 15 per cent fall in its domestic sales at 19,997 units in August as compared to 23,503 units in August 2020, but exports grew 43 per cent at 1,363 units.

Hemant Sikka, President – Farm Equipment Sector, M&M said the tractor industry saw de-growth in August over last year due to high base effect. However, with the festive period on the anvil, which also coincides with the harvesting season, the company is expecting robust demand in the coming months.

Escorts also reported a double-digit decline (27 per cent) in its August 2021 tractor sales at 4,920 units. The company said August 2021 sales were not strictly comparable with 2020 sales due to pent-up demand last year, post Covid-19 national wide lockdowns.

But Escorts continues to see strong farmer sentiments and increasing enquiry level driven by favourable macroeconomic factors, reasonably good water level of reservoirs, good pace of Kharif sowing and continued support by the government in the agriculture sector.

During April-August 2021 period, total domestic sales stood at 348,367 units as compared to 293,022 units in the year-ago period, an increase of 19 per cent.

“Domestic tractor volumes in August 2021 were below estimates and declined in double digit due to subdued customer sentiment in some monsoon-deficit States. Despite the strong start to the year, FY22 may see volume decline, led by a high base and lower government subsidies,” according to a report by Emkay Global Financial Services.

As of now tractor industry is still sticking to the growth guidance of low to mid-single digit this fiscal as against a strong growth of 28 per cent (highest growth rate in the past 10 years) last year.

Published on September 12, 2021

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