Wednesday, May 09, 2012: 06:48:00 AM

Machinist News

Tractor sales sluggish, discounts to lure buyers

With tractor sales dropping, tractor makers and dealers are announcing discounts and offers to lure buyers

India is the world’s largest market for farm vehicles. However, the domestic tractor market has been observing sagging sales over the past few months. This has compelled local tractor manufacturers and dealerships to offer discounts and freebies to lure buyers. The sector hopes to catch the buyer’s interest with freebies such as power generators and LCD television on offer.

However, these business strategies are not novel, especially at a time of sluggish sales. However, this is the first instance in 3 years when tractor manufacturers like Mahindra and Mahindra Ltd have doled out freebies to lure in buyers.
According to Vibhu Kapil, proprietor of New Delhi based Labco, a small-sized scientific equipment manufacturer, “These strategies are utilised across all industry verticals in order to push sales. There are many instances when freebies have been offered to buyers not by the company but by dealerships.”
Tractor sales in the domestic market have dropped by almost 5% to 125,689 units in the first quarter of 2012 when compared to the same period last year, according to Tractor Manufacturers Association. In 2011-12, almost 607,000 tractors were sold. The industry lobby is of the opinion that high loan rates and lower disposable income in a slowing economy have hampered buying sentiment. Also, with hike in interest rates on tractor loans, buyers are not so keen on opting for financing. As nearly 25% tractors are bought with cash, these incentives present an opportunity to drive this figure higher.
Sales on the decline
In a research report, Mahantesh Sabarad, senior vice president of Fortune Equity Brokers (India) Ltd pointed out that after growing at 25% CAGR for 3 years, tractor sales have slowed down and this downward momentum is likely to push its growth down to 5.6% by the end of 2012-13. Mr Sabarad expects sales to pick up only in 2014.
However, some industry players are hopeful that tractor sales will pick up by June, when monsoon sets in or maybe in 6 months time.
Priyanka Roy Chowdhury

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