context: Tractors hold a significant position in the PRC's ag machinery market, accounting for around 30 percent of the total annual demand for ag equipment. Large and medium-sized products are increasingly replacing smaller models, particularly in northern provinces where larger farm sizes necessitate high-horsepower machinery. Generally more versatile and cost-effective for a variety of farming tasks, wheeled tractors are more popular in the PRC, yet government subsidies now encourage the use of crawler tractors, which provide better traction and stability on loose or uneven terrain, making them ideal for heavy-duty tasks in challenging environments.
MARA (Ministry of Agriculture and Rural Affairs) released the final list of central maximum subsidies for ag machinery 2024-26 on 13 September after calling for comments in August. Support for high-horsepower and smart machinery is prominent, especially in the leading product category of tractors.
While cutting subsidies for wheeled tractors, regulators introduced new subsidies for four-wheel-drive power-shift smart tractors. The subsidy difference between traditional manual-shift tractors and smart power-shift tractors signals the need for upgrading the tractor industry.
For differential steering crawler tractors, the maximum subsidy tier has been increased from 110 to 150 horsepower. The subsidy for light crawler tractors has also been increased. This may signal a shift in the domestic market, which has traditionally favored wheeled tractors over crawler ones.
According to China YTO Group, it has recently completed preparations for the market launch of the Dongfanghong LW3204, the PRC's first domestically developed heavy-duty tractor with CVT (continuously variable transmission) and fully independent intellectual property rights. It is expected to be introduced in small batches this fall.
The Dongfanghong LW3204, was developed by YTO to meet the needs of large domestic farms and replace imports. It fills a market gap in the PRC for tractors over 300 horsepower with CVT. The tractor can automatically adjust engine speed in real-time based on workload changes, further improving overall work efficiency and energy savings.