Tractor demand drying to likely 3-year low at arid farms

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The Economic Times daily newspaper is available online now. Read Today's Paper Tractor demand drying to likely 3-year low at arid farmsBy Shally Mohile & Sharmistha Mukherjee, ET BureauLast Updated: Oct 29, 2026, 06:07:00 AM ISTSynopsis

Tractor sales are projected to fall by up to 10% year-on-year, while vehicle dealers in some markets are also seeing sharp declines in sales of entry-level cars and two-wheelers. Tractor sales were up 8% to 610,000 units in the first half of the current year from a year-ago period, according to Tractor and Mechanisation Association. The pressure is also visible in entry-level motorcycles and cars, which have a large rural market.

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Loading...×MUMBAI|NEW DELHI: Tractor sales, a bellwether for the rural economy, are on course for a three-year low this fiscal and overall rural vehicle demand is showing signs of strain as a deficient monsoon impacts farm operations and incomes, industry experts said.

Tractor sales are projected to fall by up to 10% year-on-year, while vehicle dealers in some markets are also reporting sharp declines in sales of entry-level cars and two-wheelers.

To be sure, the declines come against a high base last year, when sales spiked sharply.

Indications of Distress

This was after the reduction in goods and services tax (GST) effective September 22, 2025. Tractor dispatches had increased 23% to a record million-plus units in FY26.

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Deficient monsoon rainfall at 13% of long-period average in the country and drought in key states such as Maharashtra, Karnataka and Andhra Pradesh, along with rising commodity prices, have dented farmer sentiment and prompted lenders to turn cautious.

"There is some distress, which actually starts to impact the industry from here on," said Tarun Khanna, director of marketing at CNH India, maker of New Holland tractors and agriculture machinery. He said the impact in peninsular India could intensify over the next two to three quarters as reservoir levels fall and water availability declines.

CNH expects a flat to single-digit decline for the financial year. But the October-December quarter is likely to see a 10-15% fall in sales.

An official at a tractor maker, who declined to be identified, estimated an 8-10% decline in industry sales in FY27, citing the high base and rainfall deficit.

Also Read: Bajaj Auto CFO flags production crunch for electric two-wheelers and three-wheelers

Market leader Mahindra & Mahindra declined to comment ahead of its earnings. International Tractors, which sells Sonalika-branded tractors, also declined to comment.

Tractor sales were up 8% to 610,000 units in the first half of the current year from a year-ago period, according to Tractor and Mechanisation Association. The pressure is also visible in entry-level motorcycles and cars, which have a large rural market.

Vishal Chordia, a Kolhapur-based dealer of multiple car brands and Honda Motorcycle and Scooter India, said entry-level car sales in the markets he covers had fallen 20-25%, while entry-level two-wheeler sales were down 25-27%.

Overall motorcycle sales had declined 18-19%, he said.

Sachin Mahajan, Maharashtra state chairperson of Federation of Automobile Dealers Associations (FADA), said inconsistent and untimely rainfall had badly affected rural sentiment. Tractor sales were "very bad", he said, adding that the full picture would emerge after the festive season.

According to India Meteorological Department (IMD), Maharashtra recorded a 19% overall rainfall deficit for the June-September monsoon season.

Rural customers are postponing purchases amid uncertainty over farm earnings and waiting for government assistance, dealers said, while lenders are also flagging the risk of weaker rural cash flows.
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