As tractor sales slow, OEMs align inventory

Despite hopes of improvement in farm sector activity amid the rabi cropping season, tractor makers sent fewer tractors to dealerships in November.

This could be because tractor makers are trying to align inventory with sales, brokerages said.

Sector leader Mahindra & Mahindra Ltd dispatched 26,094 tractors in November, down 17% on year. Faridabad-based Escorts Ltd dispatched 6,492 tractors in November, down 33% on year.

The two players make up a lion's share of tractor sales in India. In September and October, retail sales of tractors fell over 20% on year each to 52,896 units and 44,262 units, respectively.

Hemant Sikka, president farm equipment sector at Mahindra & Mahindra, said rural sentiments remain positive on account of good rabi sowing and high reservoir levels.

"Escalation in procurement for Kharif crop will bring steady cash flows, which is expected to boost tractor demand going forward," he said.

Escorts said that the fall in dispatches was a "temporary phenomenon", and was on account of a delayed harvest due to late monsoon withdrawal in many parts of the country.

However, even viewed from a long-term perspective, tractor sales in the country have remained muted. Between Apr-Oct (2021-22), retail sales of tractors were at about 360,000 units. In the same period, just two players -M&M and Escorts -- sent 330,000 units to dealerships across the country. Dealers have been asking automakers to align inventory with actual market sentiments.