The pre-owned tractor market is a $10 billion market: Animesh Agarwal, Co-founder, Tractor Junction

While new tractor sales are in the fast lane, pre-owned tractor sales have also picked up in the country. Animesh Agarwal, Co-founder of Tractor Junction, a marketplace for used tractors talks about this upcoming new segment.

   
The pre-owned tractor market is a $10 billion market: Animesh Agarwal, Co-founder, Tractor Junction

The Indian tractor market is the world’s second largest, accounting for one-third of global production. China and the United States of America are the world’s other major tractor markets. Due to the increase in agricultural mechanisation, Indian farmers are readily investing in tractors equipped with new technology, appreciating their obvious advantages. In the last few years, tractor sales in India have increased exponentially. In 2020, sales closed at 80,2,670 units, 11 per cent higher than the 2019 volumes and one per cent more than the previous all-time record of 2018. On the other hand, the first quarter of FY 2021-22 recorded sales of 22,9,441 units for domestic tractor sales, according to research platform Mobility Foresights.

While new tractor sales are in the fast lane, a new segment of pre-owned tractor is making strides in the agrarian market. To understand why some farmers are turning to pre-owned tractor and how the pre-owned tractor market is growing, SME Futures spoke to Animesh Agarwal, Co-founder and COO of Tractor Junction, a marketplace for used tractor and farm machinery.

Here are the edited excerpts:

India is a tractorised market and at the same time tech is driving farming now. How has the tractor segment changed?

We have witnessed an emerging trend of technology being widely used in farming. Right from soil testing to monitoring farms via drones. Today, farmers are doing their research online and buying tractors and equipment as per their requirements and farm size. The use of Agri-tech portals and YouTube to gain information is on the rise.

Also Read: RBI implements revised digital lending norms

Also, there are “Smart” tractors available now, where a customer can get details on various parameters related to the health of their tractor on their smartphone and can take steps to ensure its optimal performance.

Can you throw some light on the pre-owned tractor market in India? What kind of market structure are we talking about?

The Indian pre-owned tractor market is nearly a $10 billion market – mostly unorganised, where both the demand and supply are highly fragmented. Our aim is to get this organised and structured to provide further wings to it. Our outlets in key rural markets give farmers the ability to visit and physically inspect the pre-owned tractors. We provide financing options to make it easier for the small and marginalised farmers.

Besides being unorganised, what are the other challenges that the pre-owned tractor segment faces?

The new tractors market has a deep distribution network; thus, it is well organised. The marketing is taken care of by the respective brands. But we cannot say the same for pre-owned tractors and this is the main challenge we are trying to address. Also, the other challenge is that there are no guarantees and warranties or a robust financing system in this segment like we see in the new tractor segment. This is what we are trying to solve with our platform.

But why is it imperative to have a pre-owned marketplace?

To answer this, we need to first understand the demographics. In India, over 80 per cent of farmers are small and medium, which means that their land holdings are below 2 hectares. Needless to say, all these farmers cannot afford to buy brand new tractors and other farm equipment. This is also reflected in the tractor penetration in India which stands at around 3 per cent. Also, the kind of down payment that is required to purchase a new tractor is high compared to what is needed for a pre-owned one. This is where a robust pre-owned tractor market is critical, so that tractor can be made accessible to all.

Being a digital marketplace, what kind of opportunities are there in this market for you? How have you grown?

We have the opportunity to help farmers to buy the right tractor and other farm equipment based on their requirements by providing the right matrix on our portal. We have seen a massive 10x growth in the past 3 years of our existence. Our clear focus on digital has helped us grow manifold. Right from the traffic on our portal and app to the leads generated and closures garnered. As far as the pre-owned tractor segment is concerned, I have already talked about how big the opportunity size is.

Also Read: Don’t hike repo rate beyond 25-35 bps, ASSOCHAM urges RBI

What is the demand scenario? Can you throw some light on the consumer analytics?

India is the largest tractor market in the world with around one million units being sold every year. Tractor sales and the progress of the monsoon have a direct correlation. We witnessed a bit of a slowdown during the rains this year due to uneven distribution and the erratic spells of the monsoon. As far as segmental demand is concerned – the 40-50 HP tractors witnessed the highest sales as they are the most suited to the medium and small farmers, providing them better value for money.

Technology and digital platforms have been the biggest equalizers of sorts for the Indian Agri sector. Earlier, farmers relied on the radio and consumer helplines for crop prices and weather information. This is fast changing in today’s digital era. Farmers are well aware of the brands, their performance, their after-sales services and their repair and maintenance services. So, the brands with a deeper network of service centres score high on preference. We are seeing a lot more sales happening digitally for tractors as well as for farm equipment as the digital divide narrows further.

Can you tell us about your footprint, is it purely online? What’s the roadmap for the company?

We are present on most digital platforms. A big share of our customers is from the portal, while the app is fast catching up. This is for the new tractor segment. For the pre-owned tractor segment, we have 8 outlets across 3 states. 5 in Rajasthan, 2 in Madhya Pradesh, and one in Nashik, Maharashtra. We are well on target to close FY23 with sales of nearly 500 pre-owned tractors, and almost 2,000 for FY24.

Leave a Reply

Your email address will not be published. Required fields are marked *