Higher costs take a toll on tractor sales

Tractor sales are in a slump as demand from farmers and brick kiln operators has waned amid higher fuel prices and vehicle costs due to the depreciation of taka against the US dollar, according to two leading dealerships.

The sale of tractors used for tilling cropland and carrying goods declined 12 per cent year-on-year to 5,304 units from 4.677 units during the July-February period of the current fiscal, said Subrata Ranjan Das, executive director of ACI Motors.

Other than tractors, sales of power tillers and diesel engines have also declined.

"We are seeing a lack of appetite in the field as price hikes for fuel and fertiliser have affected demand. Besides, the overall economy is under stress and this has impacted sales," he added.

Tractor usage in Bangladesh has increased over the years as the vehicle has multiple applications, from tilling land to hauling goods, in both rural and suburban areas.

Tractor dealerships in the country sold 6,570 units in fiscal year 2016-17.

And by the end of fiscal 2021-22, total sales had risen 26 per cent to 8,285 units, according to an estimate by ACI, which markets India's Sonalika brand tractors.

Das then said demand for the vehicle started dropping in the second half of the last calendar year as prices rose 20 per cent due to increased import cost for devaluation of taka against the US dollar.

Taka lost 14 per cent in value against the greenback since June 30, 2022, shows Bangladesh Bank data.

The ACI official said construction activities have reduced significantly in the last three months, resulting in a decline in haulage.

"So, we are seeing falling sales of tractors to brick kilns," said Sadid Jamil, managing director of Metal (Pvt) Ltd, which markets TAFE and Eicher tractors in the country.

The company's overall sales in 2022 slumped 8 per cent year-on-year to 8,080 units.

And in the first two months of this year, sales plunged by 18 per cent to 824 units, he added while pointing out that difficulty in opening letters of credit (LC) is another reason.

Bangladesh Bank data shows that the import of tractors and power tillers fell 42 per cent year-on-year to $18.5 million in the eight months ending with February of fiscal 2022-23, when LC opening had declined by nearly half.