Tractor
cos halve output, sales likely to fall 10%
MUMBAI:
High inventory levels and sluggish market conditions are affecting
the bottomlines of tractor manufacturers, forcing them to reduce production
to 50% of capacity.
With
inventory levels at the dealer end as high as 75,000 to 80,000 tractors,
the industry feels that sales will decline 8-10% during the current
year. However, despite the sluggish growth, manufacturers had recently
increased prices in the range of Rs 4,000 to Rs 5,000, owing to high
input costs.
Production
cuts and tougher credit checks on potential buyers have, however,
not helped the tractor industry reduce inventory levels.
The
industry, which has a total capacity of 2.6 lakh units, managed to
sell about 1.6 lakh tractors last year. Says a tractor manufacturer,
“This year, the manufacturers will be correcting the inventory levels
at the dealer end.”
The
tractor industry has been passing through a bad patch over the last
2-3 years, and this has continued during the current year. Sales fell
20.7% during April-May ’03 to 21,467 units from 27,104 units during
April-May ’02. A good monsoon this year, however, is expected to improve
market sentiments and boost sales in the near term.
All
the tractor makers including Mahindra & Mahindra, Punjab Tractors,
Tractor and Farm Equipment (TAFE), Escorts, Sonalika, Eicher and HMT,
have suffered a decline in sales. At first, manufacturers tried to
cope with the problem by extending credit to dealers.
But
there was a credit squeeze in the farmers’ front, largely as an after
effect of last year’s drought. Besides, second time tractor buyers
postponed purchases and instead took tractors on rentals, industry
sources said.
Meanwhile,
over the last few months, tractor manufacturers have reduced the credit
period for customers. This trend, which started in Maharashtra late
last year, is now being extended to other markets such as UP and Bihar
as well. The tractor makers are hoping that the industry will grow
in the range of 3.5% to 4.7% in ’04-05.
LIJEE
PHILIP
TIMES
NEWS NETWORK
[ SATURDAY, AUGUST
02, 2003 02:45:12 AM ]
