Bucking pandemic slowdown: June tractor production highest since Jan 2019

At a time when the entire auto sector factories are operating at a very low capacity due to coronavirus, factories producing tractors are bucking the trend. June tractor production was the highest since January 2019.

According to Tractors Manufacturers Association (TMA's) data in April 2020, total tractor production was 158 units, which rose to 81,445 units in June on the backdrop of increase in sales which was over five times of May sales. Another interesting fact was June production was higher by 25 per compared to the same month last year.

Timely arrival of monsoon, record rabi crop as well as government support for agri initiatives helped tractor sales grow in an otherwise dull auto market.

In January 2020, according to TMA data, total tractor production was 68,503 units. It dropped to 39,200 units in March, when Covid-19 started spreading and a complete lockdown was announced by the government. In, April the production dropped drastically to 158 units.

After the government relaxed norms for agricultural activities, in May, production rose to 30,751 units as demand for tractors improved drastically and it further increased to 81,445 units in June 2020.

As far as sales was concerned, in January tractor sales was 59,367 units, which increased to 64,937 units in February and dropped to 35,216 units and 12,456 units, respectively, in March and April. Sales started picking up in May to 64,860 units and further to 98,648 units in June 2020.

Hemant Sikka, president of Farm Equipment Sector for Mahindra & Mahindra Ltd, said that the timely arrival of the south west monsoon, combined benefits of a record Rabi crop, government support for agriculture initiatives and progress in the sowing of the Kharif crop have led to rise in positive sentiments among farmers. These underlying factors along with better cash flows in rural markets have helped boost tractor demand during June.

"It is expected that this demand will continue to remain buoyant in the coming months," he said.

Escorts Ltd Agri Machinery Segment (EAM's) management said that they have seen unprecedented demand in this month. The industry is expected to grow significantly backed by pent-up demand of the lockdown period, better farmer sentiment due to good monsoon prediction reflected in better than normal Kharif sowing, better rural cash flows owing to record crop output and crop prices, and reasonably good availability of retail finance.

Source: TMA

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel