Oct 6 (Reuters) - India's September tractor retail sales declined 12.6% from a month earlier as the worst monsoon in a decade and a delayed festive season weighed on farm equipment demand, even as broader auto sales stayed resilient, a dealers' body said on Tuesday.
Tractor sales fell to 76,906 units in September from 87,977 in August, according to data from the Federation of Automobile Dealers Associations.
The decline comes as the June-September monsoon, which delivers nearly 70% of India's annual rainfall, was 12.6% below normal this year, fuelling concerns over crop yields, rural demand and food inflation in Asia's third-largest economy.
Historically, September and October have been the strongest months for tractor wholesales, but a later-than-usual festive season and below-normal rainfall have hurt demand this year, said Yash Agrawal, an auto analyst at brokerage Nirmal Bang.
"Over-reliance on weather conditions is higher for tractors because they are directly impacted by crop production and overall cash flow of farmers," Agrawal said.
The slowdown could have wider implications for automakers including Mahindra & Mahindra and Escorts Kubota, as tractors are among their highest-margin businesses.
FADA President Sai Giridhar said the weakness was largely confined to tractors, arguing that rural vehicle demand was increasingly detached from farm incomes as non-agricultural businesses and employment gain prominence.
"Only the tractor segment is directly linked to farm income," Giridhar said, adding that rural sales of passenger and commercial vehicles as well as two-wheelers were growing at a pace comparable with, or exceeding, urban sales.
Overall retail sales of two-wheelers, passenger and commercial vehicles rose 31.8% year-on-year and nearly 5% from the previous month to 2.54 million units.
Dealers' sentiment was upbeat heading into the festive season, with more than three-fourths in a survey expecting sales to grow in October, supported by healthy enquiries, the dealers' body said.
Reporting by Kashish Tandon and Saikeerthi in Bengaluru; Editing by Sherry Jacob-Phillips and Mrigank Dhaniwala
Source: Reuters