Nearly 50 per cent of the tractor dealerships in the country have become functional as they are in rural areas that are not under lockdown, a report said on Wednesday.
With the opening up of mandis and aggressive procurement of crops by the government, there are positive indicators for near-term growth in rural demand, it added.
While the domestic passenger, commercial vehicles and two- and three-wheelers segment reported almost zero sales in April, the tractor space did see some action after the government allowed agriculture activities in full swing from April 21.
"As per our channel checks, nearly 50 per cent of the tractor dealerships have now opened up as they are in rural areas that are not under lockdown. (Tractor) sales were recorded in the last few days of April after the exemption of sale of agri-machinery announced by the Government," brokerage firm Centrum Broking said in the report.
Tractor firms Mahindra & Mahindra and Escorts registered domestic volumes of 4,716 units and 613 units, respectively. These volumes were lower by 83 per cent and 88 per cent on year-on-year-basis.
"As per the managements, rural sentiments are gradually improving because of the expected good Rabi crop output and expectation of good monsoon.
"Opening up of mandis, aggressive procurement of crops by the Government, and gradual opening by banks and NBFCs are positive indicators for near-term growth in rural demand," Centrum said.
Observing that demand sentiment for the vehicles is "low" due to uncertainty regarding jobs and the economic outlook, the report said some of the financiers have reduced the required loan to value (LTV) by about 10 percentage points.
Following the announcement of nationwide lockdown from March 25, the passenger and commercial as well as two-wheeler original equipment manufacturers (OEMs) have reported zero production and sales in the domestic market.
Post the opening up of ports of Mundra, Chennai and Mumbai, the OEMs have reported small volumes of exports, the report said.
Some OEMs have received permission from the local authorities to resume operations on a lower scale, with safeguards and 25-30 per cent of workforce.
"We believe the next two months also would witness a subdued performance due to the ongoing COVID-19 issue and lockdown till May 17, and that social distancing will become the new normal post COVID-19 too...there would be a shift from shared mobility to personal mobility," it said.
Centrum Broking also said it expects the earliest recovery will be by the second half of the next fiscal in the two-wheeler and tractor segments.
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