M&M Raises FY'25 Tractor Industry Forecast, Anticipates Double-Digit Growth in H2

08 Nov, 2024

Mahindra & Mahindra (M&M), India's biggest tractor maker, recently released the financial results for the quarter 2 and half year ended 30 September 2024. M&M has also raised its growth prediction for the Indian tractor industry for FY'25 to 6–6.8%. 

It is a good sign after a flat first half. The company believes that the second half of the financial year 2025 will see double-digit growth due to a recovery in the rural economy, good rainfall, and more government spending.

Strong Second Half Anticipated for Tractor Industry

Mr Rajesh Jejurikar, Executive Director and CEO of Auto and Farm Sector at M&M, said that after the release of Q2 data, the company had raised its growth forecast for the FY’25 from 5% to 6-6.8%. 

Drivers of Growth: Rural Economy, Monsoon, and Government Spending

Mr. Jejurikar pointed out a number of things that contributed to the positive results:

• 8% more rainfall
• High water levels in reservoirs
• Higher Kharif crop production 
• Higher minimum support prices (MSP) for important rabi crops 
• Growth in Government's spending on rural development 

He added, "We are seeing some really good revival of the rural economy…For the second half of the financial year 2025, we expect the industry to grow between 13-15%."

Tractor Industry's Past Performance

Even though the industry only sold about 4.72 lakh units in the first half compared to 4.69 lakh units during the same time last year, M&M is still hopeful. 

The industry's sales dropped by 7% to 8.76 lakh units in FY'24 from a high point of 9.45 lakh units in FY'23. It was due to an uneven monsoon. 

Positive Outlook for FY'25

As per the report, Swaraj and Mahindra make up 42.5% of the market share in Quarter 2 FY'25. Owing to its market dominance and strategic positioning, M&M may be able to take advantage of the expected rise in demand as the rural economy improves.

The company's new prediction also shows that it has great faith in the rural sector's ability to bounce back and in the government's commitment to helping farmers. M&M's positive view could mean that the agricultural sector as a whole is improving, especially after a tough financial year. 

We wish M&M luck in fulfilling its expectations for the coming quarter and H2.