Bumpy year ahead as tractor industry braces for lowest sales in 15 years 

Tractor sales are predicted to experience a historic dip of 67% in the months to come

LAHORE: In an emergency meeting held on Monday, Chairman of Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM) Munir Bana predicted a collapse in the sale of tractors by 67% in FY 2022-23. 

The impending slump 

Bana predicted tractor sales to drop significantly from FY 2021-22’s sale of 60,000 units to a measly 20,000 units in FY 2022-23. At 20,000, tractor sales would effectively be at their lowest number in 15 years with an all time low being set since the Pakistan Automotive Manufacturers Association (PAMA) began collecting industry sales data. The current lowest sales record stands at 32,727 units sold in FY 2019-20. 

Bana cites several reasons for this dip in the tractor sector: The rupee’s depreciation, import restrictions on auto parts, delays in refunds of sales tax by the government, and the existing duty-free import of second-hand tractors. 

“Yes this is an accurate assessment of the market. I would say it is fairly representative, compared to the same period last year. We (Millat Tractors) have seen a reduction, and so have our competitor (Al-Ghazi),” mentioned Millat Tractors’ CEO Raheel Asghar in a conversation with Profit. 

The current market situation 

“There are a number of factors affecting the market. The most evident one is the flash floods of 2022 that rampaged across Sindh, Balochistan, and lower Punjab and directly hit the purchasing power of farmers. Other than that, the government had previously exempt tractors from the sales tax. We were able to obtain refunds from the government for our input costs. We will not receive this refund now, and subsequently we had to increase our prices to cater to this,” explained Asghar. 

He cited “the combination of these two factors alongside the general economic downturn in the country responsible for this decline.”

FY 2022-23’s Four month industry wide sales at 9,258 units is 47% lower compared to last year’s 17,386 units over the same period last year. 

Furthermore, the 9,258 units also amounts to a 24% decline from the 12,256 units sold in FY 2019-20 over the same period. On its current trajectory, FY 2022-23 will likely record lower sales than FY 2019-20. 

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Daniyal Ahmad
Daniyal Ahmad
The author is a member of the staff, and covers the automobile sector as a sector analyst. He can be reached at [email protected]

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