Tractor Market in India (Focus on less than 20 HP and more than 50 HP segment)

  • ID: 3608121
  • Report
  • Region: India
  • GrowthPraxis
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The Tractor industry in India has seen a strong volume growth in the last few years backed by strong domestic demand and initiation of exports. Tractor industry has witnessed a change in demand in terms of consumer preference, primarily driven by increase of farmer’s income and creation of new value segments. Currently, 83% of the farmers in India fall under small and marginal segment (Marginal landholding – <1 ha and Small land holding- 1-2 ha), where tractor penetration is close to 1%.

The tractor industry in India is expected to grow at a CAGR of x% in the next five years. The strong historic growth is expected to continue, but there are some emerging trends in this Industry, which will act as key drivers for sales growth.

The key drivers are:
- Growing production and sales in the less than 20 HP tractor segment
- Growing production and sales in more than 50 HP tractor segment driven by demand for high-end feature laden tractors

Tractors with power output less than 20 HP have shown an outstanding growth in the last few years. In the year 2015-2016, xxx tractors were sold which had power rating less than 20 HP as compared to xxx in 2012-13. The sales has increased 10 folds backed by the production of new Mahindra Yuvraj 215 (M&M), Captain DI 2600, Captain DI 120 (Captain Tractors), Shakti MT 180D, EuroTrac-VST 180D (VST Tillers), Ustad (Greaves Cotton) and others.

The increasing demand of the tractors with power output less than 20 HP in India is propelled primarily by the cost factor driving a replacement demand (From higher HP market) and adoption from lower segment market (Up-gradation from Bullocks) . Tractors below 20 HP are ideal for land holding up to 5 acres. The availability of tractors below 20 HP will replace a large number of tractors in 21-30 HP segment. An overwhelming demand is expected to be created from the farmers’ standpoint (83% who have small and marginal land holding) who have refrained themselves from buying tractors because of the costs. KF estimates the total cost of ownership of a bull at $9,210 for 10 years, whereas it is $9,043 for a tractor with 15 HP for 10 years. This cost advantage is expected to increase the tractor penetration in the lower segment of the market. The market of tractors with HP less than 20 is heating up with multiple Indian and Foreign firms’ taking interest in this segment. In the recent past there has been some M&A (TAFE and Captain Tractors Deal, Mahindra and Punjab Tractors deal) with an aim to increase the production capacity and penetrate sub 20 HP tractor segment.

Tractors with power capacity more than 50 HP also have grown considerably in the last five years. The number of tractors sold in India was xxx in 2015-2016 as compared to xxx in 2012-13. The growth in this segment is expected to remain buoyant because of increased use of tractors in infrastructure and construction sector and replacement demand turning towards higher HP tractors. Another key trend to be looked at is the increasing demand of the features laden in these segments. With increased spending power of mid and high-income farmers, consumers are looking for tractors with AC Cabins, LCD Panels, Air suspension seats, tillable steering and ergonomically designed pedals and levers. The added benefits of working for longer hours, alternate use for construction-related purposes and possibility of renting the equipment make these tractors an attractive investment.

The number of tractors sold with power output more than 75 HP is also increasing. These tractors are available in a price band of 7-18 Lakhs. This demand primarily is driven by export and few affluent Indian farmers. The market for tractors with 75 HP and above is at a very nascent stage in India.With the launch of Mahindra & Mahindra’s Arjun International, New Holland’s 7500 Turbo Super (75 HP) and TD-90 90 HP, Indofarm’s 4175 DI (75 HP) and 4190 DI (90 HP), John Deere’s 5075 E (75 HP), the market is expected to grow rapidly.

Most of the current sales are driven by exports to Africa and US. Companies like TAFE, Sonalika and Force motors are gearing up to introduce more variants in this segment.

Emission regulations are one of the primary drivers of product costs. With India being a price sensitive market, the emission norms play a significant role in determining the price and sales. Large tractor manufacturers like M&M, Sonalika, and TAFE are producing engines which are Bharat Stage IV compliant for commercial vehicles and for tractor exports. Foreign players like John Deere, CNH are already manufacturing Tier IV engines for US, Europe. The real impact of the emission regulation is expected to be on the small manufacturers.

This report focuses on the tractor industry in India and its emerging trends. Prime reason for focusing specifically on less than <20 HP and >50 HP market is to provide a detailed analysis of this new and dynamic segments are to drive the market in the coming years. Add to the fact that these segments are not captured in systematic fashion and analysis.

Research for the report was conducted by performing interviews with several industry experts (Manufacturers, Dealers, End consumers) in different regions of India along with an extensive review of literature, statistics and reports published by relevant organizations concerned with the Tractors and Farm equipment industry. The report will act as a guide for tractor manufacturer looking to grow/sustain their market in India.
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1. Executive Summary
- Introduction
- Summary of key findings

2. Overview of Indian Tractor Market

- Segmentation of Tractor market by Power output (HP)
- Segmentation of Tractor market by Region and State
- Segmentation by Players
- Projection of market volumes (2016 to 2020)

3. Overview of Indian tractor market less than 20 HP
- Shares by Players
- Shares by Region
- Projection of the market volumes (2016-2020)
- Key demand drivers for tractors (Less than 20 HP)

4. Overview of tractor market more than 50 HP
- Shares by Players
- Shares by regions
- Projection of the market volumes (2016-2020)
- Demand driver of tractors (more than 50 HP)

5. Impact of Bharat Stage IV implementation on tractor manufacturers

6. Recommendation for tractor manufacturers

7. References
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