Tractors become first to beat previous year’s sales even as cars, bikes struggle

© Swaraj Baggonkar
This week in auto: Tractors become first to beat previous year’s sales even as cars, bikes struggle

While all eyes are on reviving sentiments impacting the automobile industry, there is one segment that has quietly outperformed. The COVID-19 disruption notwithstanding, tractor volumes for the period January to August have sailed past volumes of the same period last year, thus becoming the first segment to achieve this. More on this later in the story, but before that here is a complete look at what made headlines in the auto space this week.

Hero’s entry into electric two-wheelers

A family pact between the Munjals is stonewalling Hero MotoCorp’s grand entry into the segment, even as its close rivals Bajaj Auto and TVS Motor Company start delivering electric scooters to their customers.

The pact states that the Pawan Munjal-led Hero MotoCorp cannot use the Hero brand name to launch electric two-wheelers. Hero Electric, the company headed by Pawan’s cousin Naveen Munjal, has exclusive rights to produce and sell electric two-wheelers under the Hero brand.

Ather abandons electric motorcycle plans

The disruption caused by COVID-19 has forced Ather Energy, the Hero MotoCorp-backed electric scooter maker, to abandon plans of developing an electric motorcycle and instead focus on strengthening its existing product line-up.

The Bengaluru-based startup had set its sights on the electric motorcycle segment, which was a natural progression, after it had launched three electric scooters over the last seven years.

Auto sales hit higher gear in August

Auto sales clocked their first double-digit monthly growth for the year, selling 14 percent more passenger vehicles (PV) in August versus the same period last year.

Society of Indian Automobile Manufacturers (SIAM) data shows that wholesale volumes (those bought by dealers) of PVs closed 215,916 units in August. Two-wheeler sales grew 3 percent to 1.55 million units compared to the same period last year.

Royal Enfield to set up plant in Argentina

Royal Enfield, the niche motorcycle brand of Eicher Motors, said it will commence local assembly of motorcycles in Argentina in partnership with Grupo Simpa, a local distributor in the country since 2018.

This is the first time in Royal Enfield’s modern history  that motorcycles will be assembled and produced outside the company’s manufacturing facilities in Chennai

Triumph launches Rocket 3 GT at Rs 18.4 lakh

British motorcycle manufacturer Triumph Motorcycles has launched the Rocket 3 GT in India. The GT motorcycle comes with a price tag of Rs 18.4 lakh (ex-showroom, Delhi), which is just over Rs 40,000 than its predecessor, the Rocket 3 R.

GT gets heated grips, a flyscreen and an adjustable backrest for the pillion. Powering the Rocket 3 GT will be the same 2.5-litre, 3-cylinder engine that does duty on the R as well. This engine churns out 167 PS of power at 6,000 rpm and 221 Nm of torque at 4,000 rpm.

Tractors do roaring business

Even as PV and two-wheeler segments are coming out of the woods, tractor demand has gone through the roof. As per data shared by the Tractor Manufacturers Association (TMA), domestic sales of tractors jumped 75 percent during August to 64,729 units compared to the same month last year.

Thanks to the roaring demand sales during the January-August period have gone past sales of 2019. This happened despite the disruption caused by the COVID-19 pandemic. As per TMA, domestic sales during the eight months of the year so far stood at 435,351 units, a growth of 0.13 percent compared to the same period last year.

Agriculture and allied sectors became the standout segment amid the dismal GDP performance of all other sectors. The agriculture sector clocked a growth of 3.4 percent in the first quarter of FY21. Growth came on the back of 23.9 percent contraction in GDP in the same quarter.

Improvement in agricultural harvest, government’s rural development schemes and record water levels in the reservoirs resulted in the boom in demand for tractors. Part of the uptick in demand can also be attributed to the ramp-up in production undertaken by all manufacturers after lockdown was gradually lifted. COVID-19 has largely affected urban areas of India, leading to calls of lockdowns to control its spread while also hitting the economy hard.

Shamsher Dewan, Vice President, ICRA, said, “The strong revival in tractor volumes in August were aided by healthy rabi cash flows across regions and progress of monsoon (in line with forecasts). Further, original equipment manufacturers have been ramping up production levels to stock inventory ahead of festive season and are gearing up for healthy sales for the rest of the year.”

ICRA has upwardly revised its industry growth forecast to 7-9 percent in FY21 from an earlier estimate of 2-4 percent growth, which was due to the uncertainty regarding the impact of the pandemic on the farming community. While uncertainty still continues to exist in relation to pandemic, the rural agri scenario which matters more for robust tractor demand, is supportive of growth.

As for tractor market leader Mahindra & Mahindra domestic sales in August grew to 23,503 units, an increase of 69 percent year-on-year. Escorts, the only other listed entity from the tractor space, saw a 79 percent YoY jump in sales in August to 6,750 units.

In a statement Hemant Sikka, President – Farm Equipment Sector, M&M, said, “On the back of highest ever sales in July, we have clocked yet another highest ever sales in August. Continued positive sentiment due to increase in kharif sowing area, thereby indicating a bumper harvest, bountiful monsoon, strong rural cash flows and base effect are the reasons behind the increase.”