While the entire auto segment is facing pressure, tractor segment is seeing a good traction on the backdrop of a robust rabi output and prevailing crop prices. Also, the increase in rural and agri spending by the government should augur well for the industry.
Tractor sales grew nearly 13.52 per cent in the month of February 2020, while the whole the entire auto segment reported 2.60 per cent growth in retail sales. Going forward, shortage of funds may have a negative impact on tractor sales, says analysts.
The Federation of Automobile Dealers Associations (FADA) tractor sales of retail rose to 41,485 units in February 2020 from 36,543 units, a year ago.
Commenting on the performance of Mahindra Group during February, this year, Anand Mahindra, chairman of the group observed the tractor industry volumes has shown an encouraging sign of a potential revival in the rural economy.
Mahindra & Mahindra Ltd.’s Farm Equipment Sector (FES), a part of the $ 20.7 billion Mahindra Group, domestic sales in February 2020 were at 21,877 units, as against 18,105 units during February 2019, a growth of 21 per cent.
Rajesh Jejurikar, president – Farm Equipment Sector, Mahindra & Mahindra Ltd. said, the tractor demand trend is expected to strengthen on the back of a robust Rabi output and the prevailing crop prices. Going forward, the increase in rural and agri spending on core schemes by the Government should augur well for the industry.
“We are cautiously optimistic. We had a good monsoon, though it was late and did not benefit the Kharif crop. Given the good water situation in the country, the prospects for the coming season appear promising from an agriculture indicators perspective,” said Mallika Srinivasan – chairman & managing director, TAFE, one of the largest tractor manufacturer in the country.
Analysts at Dolat Capital said that outlook for tractor sector is positive given early green shoots seen in the rural market, higher Rabi sowing (+8%) and positive water reservoir level. Most of negatives seem to be priced in. However, considering the high base and shortage of funds at the central and state levels may have a negative impact on tractor sales, says analysts at Dolat Capital.