Tractor Industry Analysis

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Industry Analysis
1. Product scope
Tractor is the primary farm equipment used in the agricultural sector. Tractors have a major contribution in the mechanisation of agriculture. Farm tractor reduce the human labour and help increase the agricultural output. There is an ever increasing demand for agricultural produce due to the increase in population, hence tractor have a major role to play in increasing agricultural produce by automating agricultural produce. However, tractors are also used for applications including transportation, power generation and industrial applications such as forklifts, loaders, road rollers.

2. Segment wise share
The Tractor industry is segmented based on the horse power of the engines. It is classified into:
1. Less than 30 HP (<= 30 HP)
2. 31 HP to 40 HP (> 30 HP and <= 40 HP)
3. 41 HP and 50 HP (> 40 HP and <=50 HP)
4. Greater than 50 HP (> 50 HP)
The segmentation is done based on the following factors:
1. Region wise demand for each of these segments of tractors is different.
2. Shift in demand for tractor power.
These segments also vary in terms of market share, regions in which these tractors are preferred and the demand for each of these tractors.
Small Tractors (<= 30 HP) Medium Range Tractors ( >30 HP and <= 50 HP) Large Tractors (>50 HP)
Soil Conditions Soft Soil All soil types in India Hard soil
Usage For Smaller farms For Transportation For larger farms
Preferred Regions Western parts of Uttar Pradesh, Rajasthan, Haryana and Bihar Uttar Pradesh, Rajasthan, Madhya Pradesh and Andhra Pradesh Western and Southern regions
Leading Players Mahindra & Mahindra, TAFE Mahindra & Mahindra, TAFE Mahindra & Mahindra, Escorts, TAFE

The Indian Tractor Industry is primarily a medium HP market, there is...

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...rs are less aware of the pricing and offerings. The customer base is also highly fragmented. It involves a high switching cost for the buyer.
Apart from the usage of tractors in the agricultural sector it also has other commercial purposes like transportation, construction and also in airlines, hotels and resorts for hauling luggage and it is of very less proportion.
Because of the above specified purposes, tractors serve as critical inputs in many ways and the strength of this force is low.

Threat of Substitutes:
In case of agriculture the substitutes available are bullock carts, human labour, light commercial vehicles, lorries, and SUVs. Apart from these tractors are also used for transport activities and act as an input for a lot of activities. Thus the strength of this force is low.

The industry attractiveness considering the above five forces, is moderate.

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