Tractors ride out of COVID crisis to buck India auto downtrend
NEW DELHI, NNA - With agriculture performing better than most other sectors in the continuing coronavirus pandemic, tractors have bucked the downtrend in auto sales in India.
Retail sales of the farming vehicles in June and July were buoyant, growing 10.9 percent and 37.2 percent while the performance of all other auto segments had remained dismal.
According to data collated by the Federation of Automobile Dealers Associations (FADA), tractors have emerged as the only segment that shows year-on-year positive sales after a two-month nationwide lockdown that began on March 25 to battle the spread of the coronavirus.
“The lockdown measures undertaken in view of the COVID-19 pandemic, had hampered tractor industry volumes significantly in March 2020 and April 2020,” said Rohan Kanwar Gupta, assistant vice-president of ICRA Ltd., a rating agency, in its latest report.
“However, aided by healthy rabi cash flows (cash generated from the winter crop harvest between October to March) across regions, there has been a sequential improvement in tractor sales ever since,” he added.
While there is uncertainty over when the pandemic would subside, the rating agency has kept a stable outlook for tractor makers. It noted that the healthy rabi cash flows coupled with expectations of a good rainy season ending in September are likely to help the auto segment register a significant growth in the current fiscal year ending March 2021.
FADA also expects tractors to continue doing well while giving a disappointing outlook for other vehicles.
“The full year outlook continues to remain negative with a projected de-growth in retail sales in the range of 15-35 percent across various segments except tractors which look set to clock a positive annual growth,” FADA said its statement last week.
Tractor sales in India generally start in the month of March and last up till June. Business picks up again in the months of September and October on back of consumer demand due to festive Diwali season, harvesting of crops after the rainy season and sowing of winter crops.
In July, tractor sales hit 76,197 units, up from 55,522 units during the same month last year.
According to FADA, International Tractors Ltd. (ITL) or Sonalika ITL had a market share of 11.8 percent in July. Sales for Sonalika, the fourth biggest player that month, soared by 70 percent. ITL is the Indian partner of Japan’s farm equipment maker Yanmar Holdings Co.
Japanese counterpart Kubota Corp. also has a presence in India. The market share of its local subsidiary, Kubota Agricultural Machinery India Pvt. Ltd., stood at 1.59 percent in July.
Two companies of Mahindra and Mahindra Ltd. were the top two performers commanding a total market share of over 40 percent.