Tractor Segment Bets Big on Kharif Season
Despite a low single-digit dip in the sales of Tractors in May this year compared to last year's numbers, experts are betting big on higher tractor sales due to the upcoming Kharif crop season, Rabi harvest, and gradual opening up of Mandis. "Expectations of normal monsoon will also pave the way for growth in the upcoming season," say experts.
“While state-specific lockdowns and localized restrictions continue, it is heartening to see the Covid cases reducing sharply. This is leading to a sharp improvement in farmer sentiments and green shoots of recovery are visible, especially since the last week, as farmers start preparing their land for the upcoming Kharif crop season. A bumper Rabi harvest, record procurement, food prices holding up, gradual opening up of Mandis, and expectations of a normal monsoon will pave the way for growth in the upcoming season. In the exports market, we have sold 1341 tractors with a growth of 314% over last year," said Hemant Sikka, President – Farm Equipment Sector, Mahindra & Mahindra
With the Second Wave of COVID-19 infections reaching rural areas might be one of the reasons for the fall in the Tractor sales numbers.
The domestic sales recorded a drop of 8 percent with 55,599 units sold in May 2021 against the 60,441 units in May 2020.
According to Emkay Global Financial Services report - In comparison with May'19 numbers, there was a decline across segments -- Tractors/PVs witnessed a lower decline vs. 2Ws/CVs. Tractor volumes were above estimates on a pick-up in retails toward the end of May and channel filling.
Segment leader Mahindra & Mahindra Farm Equipment Sector (FES) sold 22,843 units of its tractor against 24017 units in May 2020. The company saw a 4.9 percent decline in sales but its market share increased by 1.3 percent to 41 percent.
Raghunandhan NL, Analyst, Emkay Global Research says “For Mahindra, In the Farm segment, we expect domestic volumes to be muted on a high base, lower government subsidies, and high dealer stocks”.
Another leading tractor brand Sonalika sold 8,876 tractors in May’21 with a 14.1 percent overall market share, compared to 9,177 units in May 2020, a decline of 2.86 percent. “We continued to remain connected with farmers through every possible avenue to address their queries – be it new tractors or service related. As state-wise lockdowns continue to disrupt economic activities and customer’s sentiments across segments, tractor industry has also got impacted leading to sluggish demand” said Raman Mittal, Executive Director, Sonalika Group.
Escorts Agri Machinery Segment (EAM) in May 2021 sold 6,423 tractors against 6,594 tractors sold in May 2020, a decline of 2.6 percent additionally, the company’s total tractor sales declined 2.37 percent in May 2021 compared with 6,979 tractors sold April 2021.
