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The second wave of Covid-19 and the resultant restrictions have applied brakes on tractor sales that had been rising over the past 10-11 months, bucking the automotive market trends.
Tractor sales started to move northwards from May 2020 after the partial lifting of the lockdown. The numbers continued to grow in the subsequent months as the rural economy remained robust; the other automotive segments took more time to rebound.
All segments hit
But the second wave has hit all segments. While tractor manufacturers faced production constraints, footfalls at dealerships dropped as cases surged in small towns and rural areas. As a result, sales took a beating in April.
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Second wave halts the recovery in the sectorMarket leader Mahindra & Mahindra (M&M) reported a 12 per cent drop in its domestic tractor sales at 26,130 units in April compared to 29,817 units in March. This was the second lowest monthly tractor volume for M&M in eight months.
“There is a slowdown in tractor production with disruptions in the supply chain due to rising Covid infections and localised lockdowns across States. With supplies impacted to some degree, we are working closely with our suppliers to ensure production continuity,” Hemant Sikka – President, Farm Equipment Sector, M&M Ltd, told BusinessLine.
Escorts also reported a significant decline in tractor sales in April at 6,386 units against 11,730 units in March. Though Escorts’ supply chain had minimal impact from local restrictions this time, footfalls have come down at dealerships.
Industry analysts peg the retail tractor sales for April at about 37,000 units and suggest a decline of more than 40 per cent compared to March.
“While the exact reason is yet to be known, increased spread of virus in rural areas would be one of the issues curtailing demand to an extent,” said Rohan Kanwar Gupta, Assistant Vice-President & Sector Head, Corporate Ratings, ICRA.
Silver lining
However, industry representatives and analysts project a bright growth outlook in the medium-term considering the expected record rabi harvest, sustained crop prices, and the forecast of another good monsoon all of which are seen driving demand.
After a record food output of 303 million tonnes in FY21, the Centre has set out a higher grain production target of 307 million tonnes for FY22.
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