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Tractor sales growth pace hits three-year low in FY’19

Tractor sales growth pace hits three-year low in FY’19

Published By : Khetigaadi Team   16

The Indian tractor industry witnessed the double digit development for the third sequential year in monetary year 2018-2019, however, the pace was slowest over the most recent three years.

In FY'19 tractor sales developed by 10.24 percent at 878,476 units compared with 20.52 percent and 15.74 percent in FY'18 and FY'17 individually. On a yearly premise the development rate was nearly split in FY'19 over FY'18.

The development was damaged because of weak sentiment in later piece of the year as deals slipped into negative in February and March 2019 on year-on year (yoy). This resulted into the final quarter execution posting a year on year decay of 5.78 percent.

Financial year

Total Sales

% Change

FY'17

661,195

15.74

FY'18

796,873

20.52

FY'19

878,476

10.24

Source: Tractor Manufacturers Association (TMA)
Tractor deals that mirrors country conclusion was struck because of erattic rainfall with postponed sowing and low production of rabi crops in the last financial.

According to National Bulk Handling Corporation (NBHC) report, the rainfall during the June-September 2018 mansoon season in the nation was 'below normal' with quantitatively 91 percent of the long period average.

"Inadequate north east storm rain and dry conditions prompted decrease in sowing of rabi crops by 4 percent. Inadequate rainfall brought about huge fall in sowing zones of major crops in state of Gujarat, Maharashtra, West Bengal, Rajasthan, Karnataka, Andhra Pradesh, Telangana and Tamil Nadu," NBHC report said. Low harvest yield implies hosed provincial conclusion and diminished farmer pay, which consequently implies less consumption on farm machinery and hardware.

Another report that followed area wise sales of tractor pointed out that weak demand was found mostly in the western and southern pockets of the nation in FY'19. Volume in western states (counting Gujarat and Maharashtra) declined by 8 percent while it went up by only 4.4 percent in southern states, said Kotak Institutional Equities report.

Likewise, report discoveries recommend that in spite of slowest development, small tractor players' hiked their market share in last financial, squeezing the marker share of the huge ones.

Mahindra and Mahindra (M&M), the biggest tractor producer in India experienced 1 percent decrease in market share to 40.2 percent. Similarly, TAFE's offer contracted hardly by 0.2 percent to 18.4 percent.

"M&M and TAFE have lost 140 bps and 20 bps piece of the pie, separately in FY2019 while Escorts and Sonalika have increased 110 bps and 40 bps offer, individually over this period. Smaller abroad players, for example, Kubota (+35 percent yoy) and New Holland (+20 percent yoy) have developed at a quicker pace and have increased some piece of market share. Mahindra has lost piece of the overall industry over every significant market aside from Bihar," report added.

Market share in FY'18 (%)

OEMs

Market share in FY'19 (%)

41.6

M&M (with PTL)

40.2

18.6

TAFE (with Eicher Motors)

18.4

10.7

Escorts Ltd

11.8

11.8

Sonalika

12.2

17.3

Others (John Deere, New Holland etc)

17.5

100

Total

100

The main long-go estimate for the south-west mansoon by the India Meteorological Department (IMD) flagged a positive market patterns for FY19-2020 as it anticipated close to ordinary rainstorm for the present year. Despite this, investigators stay moderate as they foresee a minor 5 percent development in tractor deals for FY'20.

"We expect an modest tractor volume development at 4-5 percent in FY'20, in case of ordinary mansoon. However, the working edges for most OEMs in the tractor business are required to stay at healthy dimensions, keeping in view the sound limit use levels," said Rohan Gupta, Assistant Vice President of rating office ICRA.



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