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Used tractor sales grew around 10% pa, but new tractors sales tapered

The country's largest organised channel for used tractor transactions, Shriram Automall India said that on the whole, the used tractor space has clocked growth in the past two years or so

Sohini Das  |  Ahmedabad 

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While new tractor sales have been in slow lane in the past few years owing to weak monsoons that dampened the rural buying, old tractors, however, seen some traction.

The country’s largest organised channel for used tractor transactions, Shriram Automall India Limited (SAMIL) said that on the whole the used tractor space has clocked growth in the past two years or so. SAMIL has seen 10-15 per cent year-on-year growth in used tractors, and the unorganised industry is expected to have grown at five-eight per cent.

This is at a time, when the overall new tractors space in the country has shrunk, from a volume of 630,000 tractors in FY11, the industry has shrunk to 495,000 units in FY16.

Sameer Malhotra, chief of Shriram Automall said the size of the used tractors space is almost 10-15 per cent more in terms of volumes than the new tractor industry. However, bulk of the trading happens through unorganised channels.

Ravindra Shahane, vice president - marketing, farm division, Mahindra and Mahindra explained that dealers of new tractors often buy used tractors from farmers as an exchange option, and then they re-sell these through their network. Tractor OEMs are hardly involved in the used tractor business.

Malhotra further explained that right before the sowing season the transactions pick up and there is usually a build up of used tractors too in the system. However, going forward, if the monsoons are not as expected, then the buying of new tractors taper down. Many farmers,however, then prefer to buy old ones from the unorganised channels or through the dealer networks.

Shriram Automall organises bidding to facilitate trade of used vehicles and equipment, starting from pre-owned commercial vehicles, construction equipment, tractors, buses, cars, etc.

It is the largest organised channel for used tractor sales in the country, and as Malhotra informed it sells around 1500-1600 tractors per month, and around 18,000-20,000 tractors in a year.

"Our sales of used tractors have been witnessing a 10-15 per cent year-on-year growth, and the unorganised space too has been clocking a 5-8 per cent growth rate," Malhotra said. Used tractor dealers in Maharashtra, Gujarat, Madhya Pradesh and Tamil Nadu said that while business has not been very brisk, business has seen some demand growth nonetheless.

This year, with forecast of an above normal monsoon, the tractor industry feels there will be at least a 10 per cent upside in demand for new tractors. This should augur well for the used tractors space as well.

Already players like Mahindra and Mahindra (which commands a 40-41 per cent market share), have seen sales picking up in April. The company sold 21,386 units in April, up 18 per cent. Other players like Escorts and Sonalika too saw sales growing in the range of 7-10 per cent.

First Published: Thu, May 12 2016. 00:07 IST