Weak monsoon dents rural demand as tractor sales fall in September

Tractor sales at Mahindra & Mahindra fell 21 per cent, and Escorts Kubota's declined 16.7 per cent in September, while passenger vehicle demand remained strong ahead of the festive season

India's weakest monsoon in over a decade dented rural spending in September, weighing on tractor ​and two-wheeler purchases, while passenger vehicle demand stayed strong ​ahead of the festive season.

The June-September monsoon, which delivers nearly 70 per cent ‌of India's annual rainfall, was 12.6 per cent below normal this year, fuelling concerns over crop yields, rural demand and food inflation in Asia's No.3 economy.

Mahindra & Mahindra, India's largest tractor maker, reported a 21 per cent drop in tractor sales during the month, while smaller rival Escorts Kubota posted a 16.7 per cent decline.

Performance was dented by a patchy monsoon and relatively lower monsoon crop sowing, Escorts Kubota said.

"Lower farm incomes and, as a result, rising rural indebtedness hurt purchasing power and demand for consumer goods and ‌services, while supply shortages can push up food prices and stoke inflationary pressures," said Rohit Azad, an economics professor at Delhi's Jawaharlal Nehru University.

The slowdown mirrors a broader pullback in farm spending.

Last week, agriculture company Rallis India said farmers were reducing purchases of pesticides, fertilisers and seeds to conserve cash after the weak monsoon and poorer harvests.

Kranthi Bathini, director of equity strategy at ​WealthMills Securities, highlighted how uneven rainfall and drought-like conditions in parts of India had ‌hurt the agrarian economy.

"That weakness is visible in segments closely tied to rural demand, such as two-wheelers and tractors," Bathini said.

Bajaj Auto's domestic ​two-wheeler ‌sales also declined 12 per cent in September.

The delayed start of the festive season further weighed ‌on sales. Festivals begin in October this year, compared with September last year, when they boosted demand for vehicles and other big-ticket purchases.

Passenger ‌vehicle ​sales, however, remained strong ​on urban demand.

Hyundai Motor India posted record monthly sales, while Maruti Suzuki, Tata Motors Passenger Vehicle and Mahindra & Mahindra reported double-digit ‌growth.

(Reporting by Saikeerthi ​and Aishwarya Jain in Bengaluru; Editing by Sherry Jacob-Phillips, Nivedita Bhattacharjee, Dhanya Skariachan and Harikrishnan Nair)