Mahindra cuts FY27 tractor market growth forecast from 5% to near zero on weak monsoon

Mahindra & Mahindra has cut its growth forecast for the country's tractor market in the financial year 2027 from 5% to nearly zero. The company said a weak monsoon, lower water in dams and pressure on farmers' incomes were the reasons. Mahindra holds about 43% of the tractor market, so the entire farm vehicle sector is watching the decision.

Rajesh Jejurikar, executive director and CEO of the auto and farm sectors at Mahindra & Mahindra, said the rain situation had worsened more than expected. Water in dams is also low. Parts of Maharashtra and Karnataka have been hit by drought, and Maharashtra is a big market for tractor sales. Rising prices of farm inputs have also increased farmers' costs.

The impact showed in the company's sales as well. In the second quarter of FY27, Mahindra's tractor sales fell 6% from a year earlier, with the company selling about 1.16 lakh tractors. The margin in the tractor business fell by 300 basis points to 17.6%. The farm sector's share in the company's total profit dropped from 32% to 23%.

Sowing and harvesting have been delayed, so money will also reach farmers late. Tractor purchases could therefore be pushed back. Rabi sowing is also likely to be late. Uttar Pradesh is the country's largest tractor market, while demand in Madhya Pradesh is improving. The situation in Rajasthan is comparatively stable. The company also said that if grain prices rise, it could support farmers' incomes.

On the other hand, Mahindra's SUV business is running above full capacity because of demand. At the end of March 2026, 64,500 vehicles were being produced every month. The company plans to raise this to 82,000 by the end of FY27, 92,000 by the end of FY28 and 1,32,000 units by FY31. In the first half of 2027, the company is preparing to launch five models: a model on the Nu_IQ platform, a new electric vehicle, a lifestyle model, a facelift and a light commercial vehicle. Costs have risen because of changes in steel, rubber, metal, oil and currency, and vehicle prices have been raised by about 5% and farm equipment prices by 4%.