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Mahindra and Mahindra (M&M) expects the dull tractor-sale season to continue for three months. "I expect sales to remain flat for the next three months and (they will) pick up only in March," said Pawan Goenka, executive director and president of farm and automotive sector of the company.
The company's domestic sales of tractors in November this year dropped 36 per cent to 14,207 units from 22,343 units in November last year. Total tractor sales inclusive of domestic and overseas during the month saw a decrease of 34 per cent to 15,333 units, as against 23,119 units for the same period last year. M&M has seen its tractor sales dip even in the previous month.
According to the company, domestic tractor sales fell 17.93 per cent to 30,800 units in October this year against 37,532 units in the same period last year
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"Harvest from kharif crops has been much lower for the season; this impacted the sales of tractors," Goenka said. He added a delayed paddy crop and low prices of sugarcane and cotton have resulted in farm income taking a dip, which also saw input costs going up resulting in low demand for tractors.
The company sells M&M and Swaraj brands of tractors in the country. "This is not only the case with us, the whole tractor industry is facing a slowdown, even with a drop in sales, we are still the market leaders," he said. M&M has a domestic market share of 40 per cent.
According to a recent report by CRISIL, sale of tractors will decline by almost 3 to 4 per cent in 2014-15 following a strong growth of 20 per cent in the last financial year due to below normal and erratic monsoon.
However Goenka is optimistic about the scenario changing by March. "A good rabi crop season will see simultaneous rise in farm income, which will boost the sale of tractors within the next three months. The new launch, Arjun Novo, is getting a good response and we expect it to get better in future," he said. The company launched two variants of Arjun Novo in September.
He also said the Indian tractor industry will reach a saturation level by 2023, which will result only in replacement demand. "After 2023, the (tractor) market would saturate and therefore we'll only see replacement demand and probably growth would come to half of that," he said.
