The Indian tractor industry reported a 10 per cent decline in domestic sales for 2019-20, amid some recovery in volumes during the second half of fiscal, before the lockdown crashed the party.

For FY20, the total domestic volumes stood at about 7.09 lakh units compared with 7.87 lakh units in 2018-19, according to the data provided by Tractor & Mechanization Association (TMA).

The decline in domestic volumes could have been lower at about 7 per cent, had the lockdown not happened in March.

The tractor sales started to move northwards from December 2019 onwards, with higher recorded monthly sales than year-ago months. But the lockdown applied a brake on the crucial momentum during the March and impacted the sales growth.

Initial recovery

“March was disrupted as business was hugely impacted by the lockdown just before the start of festive days in large parts of the country. In compliance with the regulations, the anticipated retail surge and billing totally stopped in all States,” said Hemant Sikka, President, Farm Equipment Sectors, Mahindra & Mahindra Ltd.

The sentiments during the first half of FY20 were weak due to poor farm cash flows as well as high-base effect following three years of steady growth in tractor volumes. However, improved precipitation during the South-West monsoon helped improve demand trends in the industry to an extent during the festive season.

“Subsequently, estimates of improved rabi production and consequent healthier farm cash flows resulted in a growth in volumes reported by leading tractor companies (on a monthly basis) from December 2019 onwards. It had raised hopes of a recovery in farm sentiments. The lockdown measures undertaken in view of the Covid-19 pandemic, however, hampered the recovery in wholesale industry volumes and impacted March 2020 sales significantly,” said Rohan Kanwar Gupta, Assistant Vice-President, ICRA.

Volume drop

The industry recorded a 43 per cent decline in wholesale volumes in March. Thus, led by a significant decline in wholesale volumes in March 2020, the overall tractor domestic volumes declined by 10 per cent in FY2020.

The volume drop in FY20 comes after three years of steady growth. The tractor industry posted 8 per cent growth at 7.87 units in FY19, while the growth rates were 18 per cent (5.83 lakh units) and 22 per cent (7.11 lakh units) respectively for FY17 and FY18.

Top tractor-maker Mahindra & Mahindra Ltd saw its domestic tractor sales plunge 8 per cent at 2,91,901 units for FY20. Escorts’ tractor volumes fell 12 per cent at 82,252 units.

Sonalika Tractors said it tractor sales crossed one lakh units for the third year in a row. But it didn’t provide any specific details on the growth or fall when compared with 2018-19.

Published on April 30, 2020