The tractor industry has ended the fiscal FY24 with an 8 per cent decline in domestic sales after reporting peak volumes in the previous fiscal. Though tractor exports fell 22 per cent in FY24, the March quarter signalled a rebound with positive growth in shipments.

The total domestic tractor sales stood at 867,597 units in 2023-24 against 945,311 units in FY23, according to the data provided by the Tractor & Mechanization Association (TMA). 

Besides the high base effect, weak agricultural activities due to deficient monsoon and unseasonal rains added to the woes of the industry, say industry analysts.

“Tractor volumes were impacted by an uneven monsoon caused by the El Nino impact. Spatially ill-distributed monsoon marred kharif crop production in FY24, especially in the southern States where tractor volumes declined around 20 per cent this fiscal. Moreover, reservoir levels were 18 per cent lower than last year and 5 per cent below the decadal average,” according to a recent report by Crisil.

In Q4 of FY24, domestic tractor volumes declined by 23 per cent to 162,621 units ( 210,858 units).

Market leader Mahindra & Mahindra reported a 6 per cent decline in its FY24 domestic volumes at 364,526 units. Escorts Kubota Ltd’s domestic sales fell 5 per cent at 90,239 units (95,266 units).

In FY24, total tractor production in the country stood at 947,143 units against FY23’s total production of 1,071,310 units – the highest-ever annual production number to date.

Green shoots

Despite domestic volumes ending FY24 on a low note, there’s a silver lining in exports. March 2024 saw a 6.5 per cent growth in made-in-India tractor shipments to 26,466 units, with a monthly increase throughout the quarter. Mahindra’s tractor exports surged by 26 per cent to 1748 units in March 2024.

While IMD will shortly be announcing its monsoon forecast for 2024, it is gathered that the country will witness a good monsoon this year. Private forecaster Skymet has already predicted “normal” monsoon rains in 2024.

Rating agency Crisil expects a recovery in domestic tractor volumes and the industry may clock a modest growth of 3-5 per cent in FY25, fueled by optimism surrounding a promising monsoon season, which is expected to uplift rural economy, along with higher farm income and replacement demand.