Tractor sales surge in September, but H1 numbers stay flat

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Tractor demand surged in September, with sales surpassing 100,000 units. Despite this strong monthly performance, tractor volumes for the entire September quarter showed only a marginal year-on-year increase. When compared to the previous quarter ending June 30, 2024, however, the figures reflected a notable decline, with volumes down by about 20 per cent.

Total domestic tractor sales stood at 100,542 units in September this year when compared with 96,934 units in September 2023, according to the data provided by the Tractor & Mechanization Association (TMA).

For the second quarter of this fiscal year, total domestic tractor sales reached 210,205 units, marginally higher than the 208,766 units sold in Q2 of the previous fiscal year. In Q1 of this fiscal, domestic volumes were higher at 261,874 units, driven by record-breaking sales in June. Despite this, Q1 volumes only saw a slight increase compared to Q1 FY24.

Rural sentiment remains optimistic, buoyed by favourable kharif crops and the potential for a strong rabi harvest. According to a report by Motilal Oswal Financial Services, positive terms of trade for farmers, along with upcoming festivals, are expected to drive robust demand for tractors in the coming months.

Tractor sales hit a record high of 9.4 lakh units in FY2023, but declined by 7 per cent year-on-year in FY2024, largely due to a high base effect and uneven monsoons. In the first half of the current fiscal year, sales remained relatively flat at 4.72 lakh units, compared to 4.69 lakh units during the same period in FY2024.

Mahindra & Mahindra reported a 3 per cent increase in domestic tractor sales for September, reaching 43,201 units. For the first half of the fiscal year, the company saw a 4 per cent rise in volumes, reaching 206,236 units. Escorts Kubota also saw a 6 per cent increase in September sales, with 11,985 units sold, though its six-month volumes decreased by 2.5 per cent to 54,177 units.

Hemant Sikka, President of Mahindra & Mahindra’s Farm Equipment Sector, expressed optimism, citing strong kharif and rabi crops, alongside upcoming festivals, as key factors that will boost tractor demand.

Tractor exports during the first half of FY2024 saw a marginal decline, with 49,145 units exported compared to 50,063 units in the same period last year. Q2 exports were slightly higher than those in Q1 of this fiscal.

Industry growth is expected to be modest, with volumes projected to rise by 1-4 per cent in FY2025. While retail sales have been weak so far this fiscal, Icra predicts that demand will pick up in the second half of FY2025, supported by favourable weather conditions and healthy precipitation. Additionally, the agency’s channel checks revealed that dealership inventory levels remain stable, and financing availability continues to be healthy, with moderate delinquency rates.