Tractor market to uptick from mid next year : CNH Industrial

The tractor market, which has been seeing a decline in sales the past few months, will see an uptick starting the middle of next year, said agri machinery and construction equipment maker CNH Industrial(New Holland tractors).
 

Raunak Varma, Managing Director, CNH Industrial India, said given low farm mechanisation levels, India has the potential to sell over 10 million tractors in the ongoing decade.
 

“Tractor sales have declined the past few months because of high base and inflation. Long-term, though, there is a huge potential for growth in the tractor and farm equipment segment. Including replacement, the total equipment parc is currently 5 million units, as compared with the overall requirement of 16 million units”, informed Varma.

To be sure, tractor penetration in the country at about 40% is lower than many developing nations. Tractor penetration stands at 60% in China and 75% in Brazil. Given the potential in the local market, CNH Industrial is working on increasing production capacity for tractors by 60% to 80,000 units in the next 12-14 months.
 

Varma added, “Our utilisation level is 100%. Last year, we were constrained by capacity. We have several launches planned this year. We are in the process of expanding our capacity and will be able to produce 65,000 units April onwards. This would further increase to 80,000 units over the next one year.”
 

The company has scheduled for launch multiple products in the 41-50 HP segment – which comprises nearly half the tractors sold in the local market - to shore up volumes and gain market share. CNH Industrial manufactures tractors at its facility in Greater Noida (Uttar Pradesh) and farm equipment such as harvesters, balers in Pune (Maharashtra).

Varma informed tractor sales are likely to decline by 7-8% in the ongoing calendar year. But his company expects to grow sales by a similar number on the back of an increase in capacity and new launches in CY2022. “There are no fundamental reasons for decline in tractor sales (in India) but for inflation and over saturation in the market. Crop prices are good, food demand is high, reservoirs are full. We have had three years of good monsoons, which itself is an anomaly in the last two decades. Even if monsoons disappoint this year, tractor sales will see an upcycle starting from the second half of 2023”, said.

 

CNH Industrial sold 36,500 tractors in India and SAARC countries in CY2021. Overall, about 900,000 tractors were sold in India last year. Apart from domestic sales, CNH Industrial also exports tractors among others to North America, South Africa, Southeast Asia, Australia and New Zealand from India. Exports constitute nearly 40% of production for the company

CNH Industrial globally is a leading capital goods manufacturer owned by Exor, which is in turn controlled by the Agnelli family. It sells tractors under the New Holland brand in India. The company has invested Rs 3000 crore in the Indian market in the last 10 years.

Source: economic times

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