Amir Saeed

The local tractor sales registered an increase in the first nine months of the current fiscal year (2023-24), testifying to the increasing interest of farmers and agricultural stakeholders in the adoption of machinery, reports WealthPK. The increase in sales is driven by the localization of tractors, growth in the agriculture sector, technological advancements, and improved features of local tractors. The increased year-on-year sales show a positive sign for the auto industry. Millat Tractors (MTL) sold 3,027 units, up 40 percent month-on-month, while Al Ghazi Tractors (AGTL) sold 1,581 units, up 31 percent month-on-month in March 2024. The total sales for the first nine months of the current fiscal year were 35,199 units, up 66 percent year-on-year. Speaking to WealthPK, Mr Ejaz, regional head of Millat Tractors Islamabad, said the tractor manufacturing sector was actively pursuing localization to reduce dependence on the imported components and promote domestic manufacturing.

Efforts have been made to manufacture components like engines, transmissions, and hydraulic systems locally, he added. He opined that the rise in tractor demand would lead to sustained growth in the coming months. The surge in sales is not only a positive sign for the auto industry but also indicates growth in other sectors, such as the agriculture and construction sectors, he said. He hoped that improvement in the economic activity following the IMF's new programme, a stable currency, and interest rate reductions would improve the auto sector's sales. Concluding, Ejaz said the tractor industry had also contributed to the expansion of other sectors, such as the iron and steel industry, which was the largest provider of raw materials for tractor manufacturing. Tractor parts and raw materials are also being exported globally as the allied industries gradually find their feet. Speaking to WealthPK, an official of Al Ghazi Tractors said programs like the Automotive Industry Development and Export Policy (AIDEP) aimed to promote local manufacturing and reduce imports.

The auto industry should enhance its sales through localization just like the tractor manufacturers, he opined. He explained that the localization of tractors had helped reduce the sector's exposure to dollar value fluctuations, making it less vulnerable to exchange rate risks. The auto sector should learn from the tractor manufacturers' experience in localization to reduce their exposure to the dollar value fluctuations. "Owing to low prices, the tractors manufactured in Pakistan are in more demand in Afghanistan and other African countries. Botswana, Nigeria, and Kenya are the largest export destinations for tractors," he opined. He further explained that some of the manufacturers had also established themselves as exporters. They make tools and implements attached to tractors, such as the front loader, which are complementary parts of tractors for tillage and harvesting. He concluded that the tractor industry also helped grow small and medium-sized engineering businesses. Apart from big names, most manufacturers are small firms that successfully meet the local demand.

Credit: INP-WealthPk