Tractor industry fears slowdown this quarter

Published On February 29, 2012 By at Gaadi

After a strong volume growth over the past two and half years, Indian tractor industry is likely to face a slow down in sales in this quarter, thereby resulting in a volume growth in the range of 10-11 per cent for the current financial year.

“Tractor industry had slowed down a little bit compared to what we had in the first six months where growth in third quarter was about 12-12.5 per cent. Last three months clearly have been signs of slowdown for the tractor industry in India and coming down from a growth of as much as 20 per cent or 30 per cent till October. In November, December, January, the average growth has been 3-3.5 per cent for the industry. There are some signs of concerns,” according to Pawan Goenka, president and farm equipment sector, Mahindra & Mahindra

He said the reasons for this slowdown include interest rate, including the farmers’ realisation of output because of very high or very good farm output. Also, the higher increase in the input cost for the farmer and very high labour cost. So, all of these have contributed to this relative slowing down of the tractor industry. We think that February and March would probably be along the same line. We might see a growth of 0-5 per cent in these two months and starting April which is the beginning of the season for tractor, if the monsoon forecast is good at that time, then we would expect to see going back to 8-10 per cent.

While the tractor volume growth (domestic and export) is expected at lower double digit (at volumes of 6.05 lakh units), for the current financial year, the long term industry growth is forecast at 8-9 per cent.