Tractor Industry Faces a 4% Decline in October Tractor Sales

Despite the challenges in the sales and export domains, the production side of the tractor industry showcased positive growth. In October 2023, 94,438 tractors were manufactured, surpassing the production figures of both September 2023 (90,688 units) and October 2022 (86,856 units).

In a report released by the Tractor & Mechanization Association (TMA), domestic tractor sales in India faced a 4% year-on-year decline in October 2023. The total number of units sold during the month is 118,232, a decrease from the 123,525 units recorded during the same period in the previous year.

Despite this annual dip, there was a noteworthy 22% month-on-month increase from September 2023, where sales stood at 96,934 units. Industry analysts attribute the decline in October sales to the two-month span of the festive season, which slightly overcame the market compared to the previous year.

However, with November expected to benefit from Dhanteras and Diwali purchases, industry players remain optimistic about a rebound in sales figures. Leading tractor manufacturer Mahindra & Mahindra, a key player in the market, faced a 2% dip in October 2023, selling a total of 49,336 units.

Escorts Kubota, another significant player, experienced a more substantial decline, with a 9% decrease in sales, totalling 12,642 units during the same period. On the export front, the tractor industry witnessed a downturn, with figures hitting a low of 7,186 units in October 2023. This marks the lowest export numbers since June 2020, raising concerns about the international demand for Indian tractors.

Escorts emphasised the impact of Europe's recession on its exports, as well as product-related concerns. During April-October 2023, Mahindra & Mahindra reported a 33% year-on-year reduction in tractor exports, with 7,470 units shipped.

Despite the challenges in the sales and export domains, the production side of the industry showcased positive growth. In October 2023, 94,438 tractors were manufactured, surpassing the production figures of both September 2023 (90,688 units) and October 2022 (86,856 units). This increase in production may indicate efforts by manufacturers to meet potential future demand or address domestic market needs.

Regarding tractor sales, the North region leads the way across all regions, followed by the West and East. In contrast, the South faced setbacks as a result of insufficient rainfall and reduced subsidies. Subsidies, especially in states such as Gujarat, Chattisgarh, Odisha, Jharkhand, and Assam, were critical in increasing tractor sales in the West and East.

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Domestic tractor sales totalled 5.88 lakh units between April and October, a 4% decrease from the previous fiscal year. Production and exports for the same time totalled 6.27 lakh units and 0.57 lakh units, respectively, representing a decrease from 6.76 lakh units and 0.79 lakh units in the previous year's similar period.

While the tractor industry as a whole is expected to complete the fiscal year with flat or somewhat positive growth, tractor exports are expected to fall by double digits in FY24. Concerns about a sub-normal monsoon and a large base add to the flat FY24 projection.