Tractor sales decline 15% in April-September

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New Delhi | Published: October 10, 2019 2:13:02 AM

Tractor sales fell by an estimated over 15% year-on-year (y-o-y) during the first half of 2019-20, impacted by floods in several states, lack of optimum financing and deficient monsoon till July which led to delay in sowing activities.

Mahindra & Mahindra (M&M), which commands over 40% market share, reported over 11% y-o-y dip in sales while Escorts’ volumes fell 10.4% y-o-y.Mahindra & Mahindra (M&M), which commands over 40% market share, reported over 11% y-o-y dip in sales while Escorts’ volumes fell 10.4% y-o-y.

Tractor sales fell by an estimated over 15% year-on-year (y-o-y) during the first half of 2019-20, impacted by floods in several states, lack of optimum financing and deficient monsoon till July which led to delay in sowing activities.

According to data collated from Tractors and Mechanisation Association (TMA) and other companies, domestic sales during the April-September period stood at 3.5 lakh units, against 4.10 lakh units sold in the same period in the previous fiscal.

Analysts believe while demand during September was relatively better, volumes in the first five months of FY20 were hit majorly due to weak initial monsoon rainfall and slow rural demand. “Region-wise, we note that this was mainly driven by a sharp slowdown in the South followed by the East. Our industry interactions indicate that channel inventories remain high,” analysts at Nomura said.

Mahindra & Mahindra (M&M), which commands over 40% market share, reported over 11% y-o-y dip in sales while Escorts’ volumes fell 10.4% y-o-y. Others including TAFE Group, John Deere and New Holland reported a decline of around 10% y-o-y.

M&M president for farm equipment Rajesh Jejurikar believes the challenges were short-term and demand was likely to improve during the festive season. “The recent disruption caused by heavy rains has had an impact on short-term demand. We believe that the fundamentals are in place for improved momentum over the coming months,” Jejurikar said.

Tractor sales growth in FY19 halved at 8%, against 20% in the previous fiscal (FY18). Volumes grew 18% in FY17. Analysts expect sales to remain in the negative territory in FY20. “We factor in a 7% y-o-y volume decline for tractors in FY20,” analysts at Nomura wrote.

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