But, production & sales hit a 20-month low in December
Despite hitting a 20-month low in production and domestic sales in December, the calendar year 2021 proved to be a record year for the tractor industry with annual production surpassing the one million milestone and exports crossing the one lakh mark for the first time in history.
Strong domestic sales momentum in the first half of 2021 and sustained growth in exports in the past several months pushed the total domestic tractor production for 2021 to1,065,280 units, the highest-ever annual number, as compared to 8,63,125 units in 2020.
Domestic sales up
Total domestic sales grew 13 per cent at 9,03,724 units in 2021 compared to 8,02,670 units in 2020, while exports recorded a 61 per cent at 1,24,901 units, the highest-ever annual export volume. In 2020, exports were 77,378 units.
However, December 2021 saw tractor production and domestic sales hit a 20-month low.
“Total domestic sales declined by 27 per cent at 44,428 units in December 2021 as compared to 61,249 units in December 2020. On a sequential basis, December volumes plunged 30 per cent as compared to November 2021 sales of 63,783 units,” according to data provided by the Tractor & Mechanisation Association (TMA).
“This was the fifth month of subdued tractor sales and can be attributed to relatively high base and delayed harvest owing to uneven and prolonged monsoons. Accordingly rural sentiments have been relatively muted,” said Shamsher Dewan, Vice-President & Group Head – Corporate Ratings, ICRA.
Total production was lower at 53,527 units during December 2021 as compared to 67,566 units in November 2021 and 91,969 units in December 2020. However, boom in tractor exports continued as shipments were higher by 7 per cent at 11,186 units in December 2021 when compared with 10,491 units in December 2020.
“De-growth in sales in December has been on account of a combination of factors, including the high base of last year and both delayed and very heavy rainfall in some geographies, according to Hemant Sikka, President-Farm Equipment Division, Mahindra & Mahindra Ltd, which reported 21 per cent drop in its December tractor sales.
The tractor market leader Mahindra expects a recovery in the coming months due to good progress of Kharif procurement bringing liquidity in the hands of farmers and Rabi acreage showing signs of growth over last year
“We expect a 2-6 per cent decline in tractor sales for FY2022. However, medium-term drivers aided by steady support to the farming community and rising mechanisation trend remain favourable,” said Dewan.