Tractor makers report higher sales in July

Farm income, monsoons boost demand

ICRA said healthy farm cash flows of farmers and good monsoon would steer the tractor industry through challenging times

The automobile sector may be struggling with CÓVID-19-related issues but July saw a rise in tractor sales.

Mahindra & Mahindra Ltd.’s Farm Equipment Sector (FES) reported a 27% growth in the sales of tractors to 25,402 units.

Sonalika Tractors reported a 71.7% growth in domestic sales to 8,219 units. The company sold a total of 10,223 units including exports. The comparative figures were not available.

“These are our highest-ever July sales, said Hemant Sikka, president, Farm Equipment Sector, Mahindra & Mahindra Ltd.

“The strong demand momentum continued, aided by positive sentiments due to good cash flows to farmers, higher Kharif sowing, a timely and normal monsoon and continued higher rural spending by the government,” he said.

“The sentiments are likely to remain buoyant, translating into a robust demand in the coming months.”

Raman Mittal, executive director, Sonalika Group, said, “We have recorded highest ever domestic growth of 71.7% in July 2020 beating industry growth with overall sales at 10,223 tractorsThis consistent performance is a testimony of our strong foundation and investment. We have launched tractors with advanced technology features at the same cost of current products, thus helping the farmers to upgrade and enhance productivity and income.”

ICRA said healthy farm cash flows of farmers and good monsoon would steer the tractor industry through challenging times.

The tractor industry would see a volume growth of 2 to 4% in FY21, it added.

Rohan Kanwar Gupta, assistant vice president, ICRA, said though the lockdown measures had hampered tractor industry volumes significantly in March and April 2020, sales have been rising from June 2020 aided by healthy rabi cash flows across regions. He said in June 2020 the industry recorded a 22% growth in wholesale volumes and 10% growth in retail volumes.

ICRA said the outlook for the kharif season remained favourable and a normal monsoon, adequate availability of labourers (across most regions), and government’s various agri-focused initiatives would,support farm cash flows and tractor industry volumes.

“The healthy rabi cash flows coupled with normal monsoon expectations are expected to help the industry record a growth in volumes between 2-4% in FY2021.The overall capacity utilization level in the industry is expected to remain at moderate levels of 60-65%,” it said.