Tractor industry to grow by 15% in Jan-March quarter, says Jejurikar

Despite lackluster tractor sales in the first half of this year, the tractor industry is likely to grow by 15% in the last quarter of the financial year 2025 on the back of positive farm sentiments, said Rajesh Jejurikar, Executive Director and CEO (Auto and Farm Sector), Mahindra & Mahindra Ltd. In the previous quarter (Oct-Dec), the company had revised its FY25 (full year) growth estimates from 5% to 6-6.8%. 

Commenting on the company’s third quarter results, Jejurikar said strong reservoir levels at 64% of live capacity, progress in rabi sowing, a 5% increase in kharif production, hike in the minimum support price (MSP) of rabi crops, and favourable terms of trade is likely to contribute to the 15% growth.

The farm segment of the company achieved its highest domestic volume at 1.2 lakh units, a 20% year-on-year growth. It is also leading with the largest market share of 44.2%. Despite challenges in the international business, it recorded a 14% YoY increase in its exports at 3,700 units this quarter. 

During the first half of the financial year, the tractor industry volume remained almost flat at 4.72 lakh units. The industry sold 4.69 lakh units in the year-ago period. 

After hitting a peak volume of 9.45 lakh units in 2022-23, tractor industry volume had declined 7% to 8.76 lakh units in the previous financial year. The weakness in last year’s volume came from a high base and uneven monsoon.

In the calendar year 2024, the domestic tractor volume declined by 1.5% to 9.02 lakh. The dip was, however, offset by robust sales in the second half of the year. Morever, exports increased by 1.6% to 97,745 units last year. 

Experts believe that with the introduction of the TREM-V norms, slated to launch in April, 2026, the industry might observe buying of the tractors with the old emission norms, eventually hitting the 1 million volume mark.

During the third quarter, Mahindra & Mahindra's tractor division has posted robust performance metrics, strengthening its market position with a 1.7 percentage point gain in market share during the current fiscal year, according to statements made at the company's Q3 FY25 results conference.

The division achieved notable margin performance, reaching 19.5% in Q3 for its core tractor business, which includes domestic sales and exports from India. This strong margin performance comes despite industry volatility, demonstrating the company's ability to maintain consistent profitability levels regardless of market conditions.

Farm machinery operations have also shown strong financial performance, with a 20% growth rate on a year-to-date basis. The company's consolidated revenue has increased by 11%, while Profit Before Interest and Tax (PBIT) has grown by 29%.

Rajesh Jejurikar highlighted during the conference that the company has maintained steady margin bands despite industry fluctuations, as evidenced by the strong Q3 performance coinciding with increased demand. This stability in margins, even during periods of industry volatility, underscores the company's robust business model in the agricultural equipment sector.