Call it pent up demand or very early signs of a revival. Tractors are ploughing a lone furrow in May when the rest of the auto market saw sales decline. A bumper harvest, good procurement, and pent up demand are driving the buzz in tractor sales.
M&M has seen a rise in tractor sales YoY in May with wholesale numbers of 24,341 as against 24,017 units a year ago. an equivalent is true for Sonalika which has reported an almost 19% increase in domestic and export sales with 9,177 units sold in May. Both TAFE and John Deere have seen a rise and Escorts despatches in May were equivalent as a year ago, staying flat at 6,450 units in May.
“The Covid-19 impact has not been so severe in rural areas and both harvesting and procurement are better than expected. We expect May-June 2020 overall sales to be better than 2019 by 5%. Post monsoon, the September-March season will see a 5%-10% uptick if monsoon stays on target,” said TR Kesavan, president, Tractor Manufacturers Association (TMA), the apex body for the industry. he's also the president of TAFE.
Tractor marketers are in fact jubilant about the recovery. “The Rabi harvest has been phenomenal, prices are up and reservoir levels are high — of these factors have helped,” said Rajesh Jejurikar, executive director (auto & farm sector) M&M. Also, tractor companies had a start in beginning production. “We were happier because an MHA ( ministry of home affairs) notification exempted Agri machinery from the lockdown from April 3 onwards so we had a production start,” said Shenu Aggarwal, CEO-agri-machinery, Escorts.
Interestingly, the uncertainty over migrant labor and whether or not they will return to figure for the Kharif season is additionally driving demand. “From a psychological point of view, people are beginning to invest in farm machinery thanks to the uncertainty over agri labor,” said Aggarwal.
Already tractor companies are enthusiastic about the remainder of the year. “We expect overall Q1FY21 to surpass last year. we've seen a 26% growth in tractor deliveries in May. With positive sentiment, industry deliveries should register 10% growth in June,” said Raman Mittal, executive, Sonalika Group. With the pickup, marketers also are expecting a move up the tech ladder. “We are growing in double digits compared to last year. Demand for technologically advanced products is growing as farmers check out smarter solutions. The Rabi crop was beyond expectation and therefore the farmers….and thus the chance within the rural economy is going to be a plus,” said Shailendra Jagtap, MD & CEO, Deere.