Recession hits tractor industry as bookings drop by 70%: PAAPAM

December 03, 2018: Two tractor assembly plants and 200+ tier 1 vending base moves towards closure as tractor bookings drop sharply.  This industry employs some 100000 skilled people mainly in Lahore.

Mr. Mumshad Ali former chairman Pakistan Association of Automotive Parts & Accessories Manufacturers said that this drop has come after a strong growth in the last 2 years where the industry produced between 60-70 thousand tractors annually.

This growth came at the back of PML N government support to the agri sector and CPEC. As SPEC projects are put on hold and Rupee devalues leading to price increase, drop in sales was eminent. Tractor sales are a good indicator of the health of the country’s economy in general and agri economy in particular.

Industry insiders believe that this financial year will close with less than 50,000 units sale compared to 70,000 + sales last financial year as investors pull their money out from this industry to invest elsewhere. Tractor sales have 2 seasons a year and investors are needed to purchase tractors year round to meet the demand surge after the rabi and kharif crops are harvested and agri economy cash cycle revolves.

The industry has faced drop in demand in the past as well for different reasons, such as imposition of GST, tractor subsidy schemes, news of new and old used tractor imports, commodity price crashes, floods, and crop failures. This boom and bust cycle is a big impediment in the growth of this sector in terms of volumes and quality. The industry holds great potential for exports to Africa due to the price, design and durability of the Pakistani tractor. If the industry is to rebound back, CPEC projects have to restart again and government must support the Pakistani farmer.