11 April 2019 Automobiles The domestic tractor industry is in its third year of upcycle in FY19, with ~17% CAGR in volumes over FY16-19. While fortunes of the tractor industry are heavily influenced by monsoon, tractor cycles are generally four years long (three good years and one down year). Volumes will at best grow 7-8% in FY20. However, over the long term, MM is targeting a bigger play in the USD160b global farm equipment market both in tractors (USD60b) and non-tractor equipment (USD100b). Network expansion and product launches by competitors (such as Escorts) led contraction in MMs tractor market share to 40.5% in FY19. The market share contraction is explained by the weak performance in key markets such as UP (-250bp to 38.4%), Bihar (-80bp to 48.1%), MP (-190bp to 33.3%) and Maharashtra (-50bp to 44.3%). It gained share in Punjab (+290bp to 44.1%) and Gujarat (+180bp to 41.6%).